TERM LOAN CREDIT AGREEMENT Exhibit 10(c)
DATED AS OF AUGUST 28, 2000
BY AND AMONG
SOUTHERN UNION COMPANY
as the Borrower,
THE BANKS NAMED HEREIN
as the Banks,
THE CHASE MANHATTAN BANK
as the Administrative Agent,
BANK ONE, NA
as the Syndication Agent,
FIRST UNION NATIONAL BANK
as the Documentation Agent,
BANK OF AMERICA, N.A., FLEET NATIONAL BANK, THE FUJI BANK, LIMITED
AND
THE NORINCHUKIN BANK, NEW YORK BRANCH
as the Co-Agents
AND
CHASE SECURITIES INC.
as the Sole Book Manager and Lead Arranger
<PAGE>
TERM LOAN CREDIT AGREEMENT
SOUTHERN UNION COMPANY, a corporation organized under the laws of Delaware
(hereinafter called the "Borrower"), the financial institutions listed on the
signature pages hereof (collectively, the "Banks" and individually, a "Bank"),
THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase") in its
capacity as administrative agent (the "Agent") for the Banks hereunder, BANK
ONE, NA, a national banking association, in its capacity as syndication agent
(the "Syndication Agent") for the Banks hereunder, and FIRST UNION NATIONAL
BANK, a national banking association, in its capacity as documentation agent
(the "Documentation Agent") for the Banks hereunder, hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
"Additional Costs" shall mean, with respect to any Rate Period in the case
of any Eurodollar Rate Loan, all costs, losses or payments, as determined
by any Bank in its sole and absolute discretion (which determination shall
be conclusive in the absence of manifest error) that such Bank or its
Domestic Lending Office or its Eurodollar Lending Office does, or would, if
such Eurodollar Rate Loan were funded during such Rate Period by the
Domestic Lending Office or the Eurodollar Lending Office of such Bank,
incur, suffer or make by reason of:
(a) any and all present or future taxes (including, without limitation, any
interest equalization tax or any similar tax on the acquisition of debt
obligations, or any stamp or registration tax or duty or official or
sealed papers tax), levies, imposts or any other charge of any nature
whatsoever imposed by any taxing authority on or with regard to any
aspect of the transactions contemplated by this Agreement, except such
taxes as may be measured by the overall net income of such Bank or its
Domestic Lending Office or its Eurodollar Lending Office and imposed by
the jurisdiction, or any political subdivision or taxing authority
thereof, in which such Bank's Domestic Lending Office or its Eurodollar
Lending Office is located; and
(b) any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any Eurodollar Rate Loan because of or arising
from (i) the introduction of, or any change (other than any change by
way of imposition or increase of reserve requirements, in the case of
any Eurodollar Rate Loan, included in the Eurodollar Rate Reserve
Percentage) in or in the interpretation or administration of, any law
or regulation or (ii) the compliance with any request from any central
bank or other governmental authority (whether or not having the force
of law).
"Affiliate" shall mean any Person controlling, controlled by or under
common control with any other Person. For purposes of this definition,
"control" (including "controlled by" and "under common control with") means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities or otherwise. If any Person shall own,
directly or indirectly, beneficially or of record, twenty percent (20%) or
more of the voting equity (whether outstanding capital stock, partnership
interests or otherwise) of another Person, such Person shall be deemed to
be an Affiliate.
"Agent" shall have the meaning set forth in the preamble hereto.
"Agreement" shall mean this Term Loan Credit Agreement, as the same may be
amended, modified, supplemented or restated from time to time.
"Alternate Base Rate" shall mean, for any day, a rate, per annum (rounds
upward to the nearest 1/16 of 1%) equal to: (a) the greatest of (i) the
Prime Rate (computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be) in effect on such day; or
(ii) the Federal Funds Rate in effect for such day plus one-half of one
percent (1/2%) (computed on the basis of the actual number of days elapsed
over a year of 360 days).
"Alternate Base Rate Loan" shall mean any Loan which bears interest at the
Alternate Base Rate.
<PAGE>
"Applicable Lending Office" shall mean, with respect to each Bank, such
Bank's (a) Domestic Lending Office in the case of an Alternate Base Rate
Loan; and (b) Eurodollar Lending Office in the case of a Eurodollar Rate
Loan.
"Assignment and Acceptance" shall have the meaning set forth in Section
12.13.
"Available Senior Funded Debt Capacity" for any period shall mean, as of
the first day of that period, the principal amount of additional Senior
Funded Debt that the Borrower would be permitted to issue under the then
existing indentures, note purchase agreements and credit agreements (other
than the Agreement and other revolving credit agreements).
"Bank" shall have the meaning set forth in the preamble hereto and shall
include the Agent, in its individual capacity.
"Borrower" shall have the meaning set forth in the preamble hereto.
"Borrowing Date" shall mean a date upon which the Borrower has requested a
Loan (or if applicable, the rollover or conversion of the principal balance
of any outstanding Loan hereunder for any subsequent Rate Period) to be
made in a Notice of Borrowing delivered pursuant to Section 2.1.
"Business Day" shall mean a day when the Agent is open for business,
provided that, if the applicable Business Day relates to any Eurodollar
Rate Loan, it shall mean a day when the Agent is open for business and
banks are open for business in the London interbank market and in New York
City.
"Capital Lease" shall mean any lease of any Property (whether real,
personal, or mixed) which, in conformity with GAAP, is accounted for as a
capital lease on the balance sheet of the lessee.
"Capitalized Lease Obligations" shall mean, for the Borrower and its
Subsidiaries, any of their obligations that should, in accordance with
GAAP, be recorded as Capital Leases.
"Cash Interest Expense" shall mean, for any period, total interest expense
to the extent paid in cash (including the interest component of Capitalized
Lease Obligations and capitalized interest and all dividends and interest
paid on or with respect to Borrower's Structured Securities) of the
Borrower and any Subsidiary for such period all as determined in conformity
with GAAP.
"Closing Date" shall mean August 28, 2000.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and
interpretations thereof or thereunder issued by the Internal Revenue
Service.
"Commitment" shall have the meaning set forth in Section 2.1(a) and
"Commitments" shall mean, collectively, the Commitments of all of the
Banks.
"Consolidated Net Income" shall mean for any period the consolidated net
income of the Borrower and all Subsidiaries, determined in accordance with
GAAP, for such period.
"Consolidated Net Worth" shall mean, for any period for the Borrower and
all Subsidiaries, (a) the consolidated stockholders' equity of the Borrower
and its Subsidiaries, and preferred securities of the Borrower's
Subsidiaries, all determined in accordance with GAAP, less (b) the sum of
the following consolidated items, without duplication: the book amount of
any deferred charges (including, but not limited to, unamortized debt
discount and expenses, organization expenses, experimental and development
expenses, but excluding prepaid expenses) that are not permitted to be
recovered by the Borrower under rates permitted under rate tariffs, plus
(c) the sum of all amounts contributed or paid by the Borrower to the Rabbi
Trusts for purposes of funding the same, but only to the extent such
contributions and payments are required to be deducted from the
consolidated stockholders' equity of the Borrower and its Subsidiaries in
accordance with GAAP.
<PAGE>
"Consolidated Total Capitalization" shall mean at any time the sum of: (a)
Consolidated Net Worth at such time; plus (b) the principal amount of
outstanding Debt of the Borrower and its Subsidiaries.
"Consolidated Total Indebtedness" shall mean all Debt of the Borrower and
all Subsidiaries including any current maturities thereof, plus, without
duplication, all amounts outstanding under Standby Letters of Credit,
including without limitation, all Revolving Facility Letters of Credit.
"Debt" means (without duplication), for any Person indebtedness for money
borrowed determined in accordance with GAAP but in any event including, (a)
indebtedness of such Person for borrowed money or arising out of any
extension of credit to or for the account of such Person (including,
without limitation, extensions of credit in the form of reimbursement or
payment obligations of such Person relating to letters of credit issued for
the account of such Person) or for the deferred purchase price of property
or services, except indebtedness which is owing to trade creditors in the
ordinary course of business and which is due within thirty (30) days after
the original invoice date; (b) indebtedness of the kind described in clause
(a) of this definition which is secured by (or for which the holder of such
Debt has any existing right, contingent or otherwise, to be secured by) any
Lien upon or in Property (including, without limitation, accounts and
contract rights) owned by such Person, whether or not such Person has
assumed or become liable for the payment of such indebtedness or
obligations; (c) Capitalized Lease Obligations of such Person; (d)
obligations under direct or indirect Guaranties other than Guaranties
issued by the Borrower covering obligations of the Southern Union Trusts
under the Structured Securities. Whenever the definition of Debt is being
used herein in order to compute a financial ratio or covenant applicable to
the consolidated business of the Borrower and its Subsidiaries, Debt which
is already included in such computation by virtue of the fact that it is
owed by a Subsidiary of the Borrower will not also be added by virtue of
the fact that the Borrower has executed a guaranty with respect to such
Debt that would otherwise require such guaranteed indebtedness to be
considered Debt hereunder. Nothing contained in the foregoing sentence is
intended to limit the other provisions of this Agreement which contain
limitations on the amount and types of Debt which may be incurred by the
Borrower or its Subsidiaries.
"Debtor Laws" shall mean all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency,
reorganization, or similar laws, or general equitable principles from time
to time in effect affecting the rights of creditors generally.
"Default" shall mean any of the events specified in Section 10, whether or
not there has been satisfied any requirement in connection with such event
for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act.
"Dollars" and "$" shall mean lawful currency of the United States of
America.
"Domestic Lending Office" shall mean, with respect to each Bank, the office
of such Bank located at its "Address for Notices" set forth below the name
of such Bank on the signature pages hereof or such other office of such
Bank as such Bank may from time to time specify to the Borrower and the
Agent.
"EBDIT" shall mean for any period the sum of (a) consolidated net earnings
for the Borrower and its Subsidiaries (excluding for all purposes hereof
all extraordinary items), plus (b) each of the following to the extent
actually deducted in deriving such net earnings: (i) depreciation and
amortization expense; (ii) interest expense; (iii) federal and state income
taxes; and (iv) dividends charged against income on or with respect to
Structured Securities, in each case before adjustment for extraordinary
items, as shown in the financial statements of Borrower and its
Subsidiaries referred to in Section 6.2 hereof (excluding for all purposes
hereof all extraordinary items), and determined in accordance with GAAP,
and (c) plus (or minus, if applicable) the net amount of non-cash
deductions from (or additions to, if applicable) such net earnings for such
period attributable to fluctuations in the market price(s) of securities
which the Borrower is obligated to purchase in future periods under any of
the Rabbi Trusts, but only to the extent that such deductions (or
additions, if applicable) are required to be taken in accordance with GAAP.
<PAGE>
"Eligible Assignee" shall mean: (i) any Bank, or any Affiliate of any Bank,
or any institution 100% of the voting stock of which is directly, or
indirectly owned by such Bank or by the immediate or remote parent of such
Bank; or (ii) a commercial bank, a foreign branch of a United States
commercial bank, a domestic branch of a foreign commercial bank or other
financial institution having in each case assets in excess of
$1,000,000,000.00.
"Environmental Law" shall mean (a) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.A. ss. 9601
et seq.), as amended from time to time, and any and all rules and
regulations issued or promulgated thereunder ("CERCLA"); (b) the Resource
Conservation and Recovery Act (as amended by the Hazardous and Solid Waste
Amendment of 1984, 42 U.S.C.A. ss. 6901 et seq.), as amended from time to
time, and any and all rules and regulations promulgated thereunder
("RCRA"); (c) the Clean Air Act, 42 U.S.C.A. ss. 7401 et seq., as amended
from time to time, and any and all rules and regulations promulgated
thereunder; (d) the Clean Water Act of 1977, 33 U.S.CA ss. 1251 et seq., as
amended from time to time, and any and all rules and regulations
promulgated thereunder; (e) the Toxic Substances Control Act, 15 U.S.C.A.
ss. 2601 et seq., as amended from time to time, and any and all rules and
regulations promulgated thereunder; or (f) any other federal or state law,
statute, rule, or emulation enacted in connection with or relating to the
protection or regulation of the environment (including, without limitation,
those laws, statutes, rules, and regulations regulating the disposal,
removal, production, storing, refining, handling, transferring, processing,
or transporting of Hazardous Materials) and any rules and regulations
issued or promulgated in connection with any of the foregoing by any
governmental authority, and "Environmental Laws" shall mean each of the
foregoing.
"EPA" shall mean the Environmental Protection Agency, or any successor
organization.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules, regulations, rulings and
interpretations thereof issued by the Internal Revenue Service or the
Department of Labor thereunder.
"Eurocurrency Liabilities" shall have the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" shall mean, with respect to each Bank, the
office of such Bank located at its "Address for Notices" set forth below
the name of such Bank on the signature pages hereof, or such other office
of such Bank as such Bank may from time to time specify to the Borrower and
the Agent.
"Eurodollar Rate" shall mean with respect to the applicable Rate Period in
effect for each Eurodollar Rate Loan, the sum of (a) the quotient obtained
by dividing (i) the annual rate of interest determined by the Agent, at or
before 11:00 a.m. Houston time (or as soon thereafter as practicable), on
the second Business Day prior to the first day of such Rate Period, to be
the annual rate of interest at which deposits of Dollars are offered to the
Agent by prime banks in whatever Eurodollar interbank market may be
selected by the Agent in its sole discretion, acting in good faith, at the
time of determination and in accordance with then existing practice in such
market for delivery on the first day of such Rate Period in immediately
available funds and having a maturity equal to such Rate Period in an
amount substantially equal to the amount of such Eurodollar Rate Loan by
(ii) a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Rate Period, plus (b) an additional percentage per
annum changing with the rating of the Borrower's unsecured, non-credit
enhanced Senior Funded Debt and determined in accordance with the following
grid:
<PAGE>
Rating of the Borrower's unsecured, non-credit enhanced Additional Percentage
Senior Funded Debt Per Annum
------------------------------------------------------- ---------------------
Equal to or greater than A3 by Moody's Investor Service,
Inc. and equal to or greater than A- by Standard and
Poor's Ratings Group 0.775%
Baa1 by Moody's Investor Service, Inc. or BBB+ by
Standard and Poor's Ratings Group 0.875%
Baa2 by Moody's Investor Service, Inc. or BBB by
Standard and Poor's Ratings Group 0.925%
Baa3 by Moody's Investor Service, Inc. or BBB-
by Standard and Poor's Ratings Group 1.000%
Equal to or less than Ba1 by Moody's Investor Service,
Inc. and equal to or less than BB+ by Standard and
Poor's Ratings Group 1.500%
========================================================== ====================
In the event that Borrower withdraws from having its unsecured, non-credit
enhanced Senior Funded Debt being rated by Moody's Investor Service, Inc.
or Standard and Poor's Ratings Group, so that one or both of such ratings
services fails to rate the Borrower's unsecured, non-credit enhanced Senior
Funded Debt, the component of pricing from the grid set forth above for
purposes of determining the applicable Eurodollar Rate for all Rate Periods
commencing thereafter shall be 1.500% until such time as Borrower
subsequently causes its unsecured, non-credit enhanced Senior Funded Debt
to be rated by both of said ratings services.
"Eurodollar Rate Loan" shall mean any Loan that bears interest at the
Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" of the Agent for any Rate Period for
any Eurodollar Rate Loan shall mean the reserve percentage applicable
during such Rate Period (or if more than one such percentages shall be so
applicable, the daily average of such percentages for those days in such
Rate Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental, or other marginal reserve requirement) for member banks of
the Federal Reserve System with deposits exceeding $1,000,000,000 with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Rate Period.
"Event of Default" shall mean any of the events specified in Section 10,
provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening
of any further condition, event or act.
"Expiration Date" shall mean the last day of a Rate Period.
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates (rounded to the nearest 1/100 of 1%) on overnight
federal fund transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from Fulton Prebon and Garvin
Guy Butler or two other federal funds brokers of recognized standing
selected by the Agent.
"Funded Debt" means all Debt of a Person which matures more than one year
from the date of creation or matures within one year from such date but is
renewable or extendible, at the option of such Person, by its terms or by
the terms of any instrument or agreement relating thereto, to a date more
than one year from such date or arises under a revolving credit or similar
agreement which obligates Banks to extend credit during a period of more
than one year from such date, including, without limitation, all amounts of
any Funded Debt required to be paid or prepaid within one year from the
date of determination of the existence of any such Funded Debt.
<PAGE>
"GAAP" shall mean generally accepted accounting principles, applicable to
the circumstances as of the date of determination, applied consistently
with such principles as applied in the preparation of the Borrowers audited
financial statements referred to in Section 6.2.
"General Intangibles" shall mean all of the Borrower's contract rights now
existing or hereafter acquired, arising or created under contracts or
arrangements for the purchase, sale, storage or transportation of gas or
other Inventory.
"Governmental Authority" shall mean any (domestic or foreign) federal,
state, county, municipal, parish, provincial, or other government, or any
department, commission, board, court, agency (including, without
limitation, the EPA), or any other instrumentality of any of them or any
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of, or
pertaining to, government, including, without limitation, any arbitration
panel, any court, or any commission.
"Governmental Requirement" means any Order, Permit, law, statute
(including, without limitation, any Environmental Protection Statute),
code, ordinance, rule, regulation, certificate, or other direction or
requirement of any Governmental Authority.
"Guaranty" means, with respect to any Person, any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of
another Person, including, without limitation, by means of an agreement to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt or to maintain financial covenants, or to assure the payment of
such Debt by an agreement to make payments in respect of goods or services
regardless of whether delivered or to purchase or acquire the Debt of
another, or otherwise, provided that the term "Guaranty" shall not include
endorsements for deposit or collection in the ordinary course of business.
"Hazardous Materials" shall mean any substance which, pursuant to any
Environmental Laws, requires special handling in its collection, use,
storage, treatment or disposal, including but not limited to any of the
following: (a) any "hazardous waste" as defined by RCRA; (b) any "hazardous
substance" as defined by CERCLA; (c) asbestos; (d) polychlorinated
biphenyls; (e) any flammables, explosives or radioactive materials; and (f)
any substance, the presence of which on any of the Borrower's or any
Subsidiary's properties is prohibited by any Governmental Authority.
"Highest Lawful Rate" shall mean, with respect to each Bank, the maximum
nonusurious interest rate, if any, that at any time or from time to time
may be contracted for, taken, reserved, charged, or received with respect
to the Notes or on other amounts, if any, due to such Bank pursuant to this
Agreement, under laws applicable to such Bank which are presently in
effect, or, to the extent allowed by law, under such applicable laws which
may hereafter be in effect and which allow a higher maximum nonusurious
interest rate than applicable laws now allow.
"Indemnified Parties" shall have the meaning set forth in Section 12.16.
"Interest Payment Date" shall mean (a) as to any Eurodollar Rate Loan in
which the Rate Period with respect thereto is not greater than three (3)
months, the date on which such Rate Period ends; (b) as to any Eurodollar
Rate Loan in which the Rate Period with respect thereto is greater than
three (3) months, the date on which the third month of such Rate Period
ends, and the date on which each such Rate Period ends; (c) as to any
Alternate Base Rate Loan in which the Rate Period with respect thereto is
not greater than ninety (90) days, the date on which such Rate Period ends;
(d) as to any Alternate Base Rate Loan in which the Rate Period with
respect thereto is greater than ninety (90) days, the ninetieth (90th) day
of such Rate Period, and the date on which each such Rate Period ends; and
(e) as to all Loans, such time as the principal of and interest on the
Notes shall have been paid in full.
<PAGE>
"Inventory" means, with respect to Borrower or any Subsidiary, all of such
Person's now owned or hereafter acquired or created inventory in all of its
forms and of every nature, wherever located, whether acquired by purchase,
merger, or otherwise, and all raw materials, work in process therefor and
finished goods thereof, and all supplies, materials, and products of every
nature and description used, usable, or consumed in connection with the
manufacture, packing, shipping, advertising, selling, leasing, furnishing,
or production of such goods, and shall include, in any event, all
"inventory" (within the meaning of such term in the Uniform Commercial Code
in effect in any applicable jurisdiction), whether in mass or joint, or
other interest or right of any kind in goods which are returned to,
repossessed by, or stopped in transit by such Person, and all accessions to
any of the foregoing and all products of any of the foregoing.
"Investment" of any Person means any investment so classified under GAAP,
and, whether or not so classified, includes (a) any direct or indirect loan
advance made by it to any other Person; (b) any direct or indirect Guaranty
for the benefit of such Person; provided, however, that for purposes of
determining Investments of Borrower hereunder, the existing Guaranty by
Borrower of certain tax increment financing extended by The Fidelity
Deposit and Discount Bank to The Redevelopment Authority of the County of
Lackawanna shall be deemed to not be an Investment; (c) any capital
contribution to any other Person; and (d) any ownership or similar interest
in any other Person; and the amount of any Investment shall be the original
principal or capital amount thereof (plus any subsequent principal or
capital amount) minus all cash returns of principal or capital thereof.
"Letter(s) of Credit" shall mean, in the singular form, any letter of
credit issued by any Person for the account of the Borrower and, in the
plural form, all such letters of credit issued by any Person for the
account of the Borrower.
"Lien" shall mean any mortgage, deed of trust, pledge, security interest,
encumbrance, lien (including without limitation, any such interest arising
under any Environmental Law), or similar charge of any kind (including
without limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement or any lease in the
nature thereof), or the interest of the lessor under any Capital Lease.
"Loan" or "Loans" shall mean a loan or loans, respectively, from the Banks
to the Borrower made under Section 2.1.
"Loan Document" shall mean this Agreement, any Note, or any other document,
agreement or instrument now or hereafter executed and delivered by the
Borrower or any other Person in connection with any of the transactions
contemplated by any of the foregoing, as any of the foregoing may hereafter
be amended, modified, or supplemented, and "Loan Documents" shall mean,
collectively, each of the foregoing.
"Majority Banks" shall mean at any time Banks holding more than 50% of the
unpaid principal amounts outstanding under the Notes, or, if no such
amounts are outstanding, more than 50% of the Pro Rata Percentages.
"Material Adverse Effect" shall mean any material adverse effect on (a) the
financial condition, business, properties, assets, prospects or operations
of the Borrower and its Subsidiaries taken as a whole, or (b) the ability
of the Borrower to perform its obligations under this Agreement, any Note
or any other Loan Document on a timely basis.
"Maturity Date" shall mean August 27, 2001, as the same may be extended
pursuant to the provisions of Section 2.4 hereof.
"Non-Revolving Credit Facility Letter of Credit" shall mean any Letter of
Credit which is not a Revolving Credit Facility Letter of Credit.
"Note" or "Notes" shall mean a promissory note or notes, respectively, of
the Borrower, executed and delivered under this Agreement.
"Notice of Borrowing" shall have the meaning set forth in Section 2.1(c).
"Obligations" shall mean all obligations of the Borrower to the Banks under
this Agreement, the Notes and all other Loan Documents to which it is a
party.
"Officer's Certificate" shall mean a certificate signed in the name of the
Borrower by either its President, one of its Vice Presidents, its
Treasurer, its Secretary, or one of its Assistant Treasurers or Assistant
Secretaries.
<PAGE>
"Pending Acquisitions" shall mean collectively the following described
mergers by the Borrower with such specified entities, so long as (i) after
the finalization and consummation of such mergers the Borrower is the
surviving entity and (ii) such mergers are finalized and consummated on or
before October 31, 2000 in substantial compliance with the following
specified terms:
(a) The contemplated merger of the Borrower and Fall River Gas Company
announced October 5, 1999, whereby the Borrower acquires Fall River Gas
Company for consideration of approximately $75,000,000.00, including
assumption of certain existing Debt of Fall River Gas Company;
(b) The contemplated merger of the Borrower and Providence Energy
Corporation announced November 15, 1999, whereby the Borrower acquires
Providence Energy Corporation for consideration of approximately
$400,000,000.00, including assumption of certain existing Debt of
Providence Energy Corporation, with each shareholder of Providence
Energy Corporation receiving cash of $42.50 per each outstanding share
of Providence Energy Corporation; and
(c) The contemplated merger of the Borrower and Valley Resources, Inc.
announced December 1, 1999, whereby the Borrower acquires Valley
Resources, Inc. for consideration of approximately $160,000,000.00,
including assumption of certain existing Debt of Valley Resources,
Inc., with each shareholder of Valley Resources, Inc. receiving cash
of $25.00 per each outstanding share of Valley Resources, Inc.
"Person" shall mean an individual, partnership, joint venture, corporation,
joint stock company, bank, trust, unincorporated organization and/or a
government or any department or agency thereof.
"Plan" shall mean any plan subject to Title IV of ERISA and maintained for
employees of the Borrower or of any member of a "controlled group of
corporations," as such term is defined in the Code, of which the Borrower
or any Subsidiary is a member, or any such plan to which the Borrower or
any Subsidiary is required to contribute on behalf of its employees.
"Prime Rate" shall mean, on any day, the rate determined by the Agent as
being its prime rate for that day. Without notice to the Borrower or any
other Person, the Prime Rate shall change automatically from time to time
as and in the amount by which said Prime Rate shall fluctuate, with each
such change to be effective as of the date of each change in such Prime
Rate. The Prime Rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer. The Agent may
make commercial or other loans at rates of interest at, above or below the
Prime Rate.
"Pro-Rata Percentage" shall mean with respect to any Bank, a fraction
(expressed as a percentage), the numerator of which shall be the amount of
such Bank's Commitment and the denominator of which shall be the aggregate
amount of all the Commitments of the Banks, as adjusted from time to time
in accordance with Section 3.6.
"Property" shall mean any interest or right in any kind of property or
asset, whether real, personal, or mixed, owned or leased, tangible or
intangible, and whether now held or hereafter acquired.
"Qualifying Assets" shall mean (i) equity interests owned one hundred
percent (100%) by the Borrower in entities engaged primarily in one or more
of the Borrower's lines of business described in Section 6.15 (singly, a
"Qualified Entity," collectively, "Qualified Entities"), or productive
assets used in one or more of such lines of business; provided, however,
that as to any related group of such assets acquired for a purchase price
of more than Sixty Million Dollars ($60,000,000.00) (including the amount
of any Debt assumed or deemed incurred in connection with such
acquisition), the Majority Banks shall have delivered to the Borrower their
prior written consent; and (ii) equity interests of less than one hundred
percent (100%) owned by the Borrower in one or more Qualifying Entities,
provided that at any one time the amount of the Borrower's investment in
Qualifying Assets described in clause (ii) (measured by the aggregate
purchase price paid therefor, including the aggregate amount of Debt
assumed or deemed incurred by Borrower in connection with such
acquisitions) does not exceed ten percent (10%) of the Consolidated Net
Worth of the Borrower and its Subsidiaries as of the applicable
determination date.
<PAGE>
"Rabbi Trusts" shall mean those four (4) certain non-qualified deferred
compensation irrevocable trusts existing as of the Closing Date, previously
established by the Borrower for the benefit of its executive employees, so
long as the assets in each of such trusts which have not yet been
distributed to one or more executive employees of the Borrower remain
subject to the claims of the Borrower's general creditors.
"Rate Period" shall mean the period of time for which the Alternate Base
Rate or the Eurodollar Rate shall be in effect as to any Alternate Base
Rate Loan or Eurodollar Rate Loan, as the case may be, commencing with the
Borrowing Date or the Expiration Date of the immediately preceding Rate
Period, as the case may be, applicable to and ending on the effective date
of any rollover borrowing made as provided in Section 2.2(a) as the
Borrower may specify in the related Notice of Borrowing, subject, however,
to the early termination provisions of the second sentence of Section
2.3(b) relating to any Eurodollar Rate Loan; provided, however, that any
Rate Period that would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Rate Period shall
end on the next preceding Business Day. For any Alternate Base Rate Loan,
the Rate Period shall be 90 days; and for any Eurodollar Rate Loan the Rate
Period may be 15 days, 1, 2, 3, or 6 months, in each case as specified in
the applicable Notice of Borrowing, subject to the provisions of Sections
2.2 and 2.3.
"Release" shall mean a "release", as such term is defined in CERCLA.
"Restricted Payment" shall mean the Borrower's declaration or payment of
any dividend on, or purchase or agreement to purchase any of, or making of
any other distribution with respect to, any of its capital stock, except
any such dividend, purchase or distribution consisting solely of capital
stock of the Borrower, and except any dividend or interest paid on or with
respect to the Borrower's Structured Securities to the extent that such
amounts are included in Cash Interest Expense.
"Revolving Credit Facilities" shall mean (a) that certain $90,000,000.00
revolving credit facility provided to the Borrower under the terms of that
certain Amended and Restated Revolving Credit Agreement (Short-Term Credit
Facility) dated effective May 31, 2000 by and among the Borrower, Chase
Bank of Texas, National Association, as administrative agent, and the banks
or financial institutions now or hereafter a party thereto, (b) that
certain $135,000,000.00 revolving credit facility provided to the Borrower
under the terms of that certain Amended and Restated Revolving Credit
Agreement (Long-Term Credit Facility) dated effective May 31, 2000 by and
among the Borrower, Chase Bank of Texas, National Association, as
administrative agent, and the banks or financial institutions now or
hereafter a party thereto, and (c) any and all amendments, modifications,
increases, supplements and/or restatements of either of said revolving
credit facilities now or hereafter existing from time to time.
"Revolving Credit Facility Letter(s) of Credit" shall mean, in the singular
form, any Standby Letter of Credit issued for the account of the Borrower
under either of the Revolving Credit Facilities and, in the plural form,
all such Standby Letters of Credit issued for the account of the Borrower.
"Securities Act" shall have the meaning set forth in Section 12.1.
"Senior Funded Debt" shall mean Funded Debt of the Borrower excluding Debt
that is contractually subordinated in right of payment to any other Debt.
"Senior Notes" means (a) the $475,000,000 of 7.6% Senior Notes of the
Borrower previously placed with investors on or about January 31, 1994, and
(b) the $300,000,000 of 8.25% Senior Notes of the Borrower previously
placed with investors on or about November 3, 1999, as such Senior Notes
may be amended, modified, or supplemented from time to time in accordance
with the terms of this Agreement; and "Senior Note" means each such note
individually.
"Significant Property" shall mean at any time property or assets of the
Borrower or any Subsidiary having a book value (net of accumulated
depreciation taken in accordance with GAAP) of at least $5,000,000.00 or
that contributed (or is an integrated physical portion of an assemblage of
assets that contributed) at least 5% of the gross income of the owner
thereof for the fiscal quarter most recently ended.
<PAGE>
"Southern Union Trust" means any of those certain Delaware business trusts
organized for the sole purpose of purchasing Subordinated Debt Securities
constituting a portion of, and described in the definition of, Structured
Securities and issuing the Preferred Securities and Common Securities also
constituting a portion of, and described in the definition of, Structured
Securities, and having no assets other than the Borrower's Subordinated
Debt Securities, the Guaranties (as described in the definition of
Structured Securities) and the proceeds thereof. Southern Union Trusts
shall be considered to be Subsidiaries for purposes hereof so long as their
affairs are consolidated under GAAP and for federal income tax purposes
with the affairs of the Borrower.
"Standby Letter of Credit" shall mean any standby letter of credit issued
to support obligations (contingent or otherwise) of the Borrower.
"Structured Securities" shall mean collectively (a) the Subordinated Debt
Securities, the Guaranties, the Common Securities and the Preferred
Securities of the Southern Union Trusts, all as described and defined in
the Registration Statement on Form S-3 filed by the Borrower with the
Securities and Exchange Commission on March 25, 1995, and (b) subordinated
debt securities, guaranties, common securities and/or preferred securities
hereafter issued in connection with the consummation of the Pending
Acquisitions in an aggregate face amount of not more than $150,000,000 upon
terms and conditions substantially similar in all material respects to the
terms and conditions described and defined in such Registration Statement
on Form S-3 filed by the Borrower with the Securities and Exchange
Commission on March 25, 1995. For all purposes of this Agreement, the
amounts payable by Southern Union Trusts under the Preferred Securities and
Common Securities (or similar securities provided for under subclause (b)
above) and the amounts payable by the Borrower under the Subordinated Debt
Securities or the Guaranties (or similar securities provided for under
subclause (b) above) shall be treated without duplication, it being
recognized that the amounts payable by Southern Union Trusts are funded
with payments made or to be made by the Borrower to Southern Union Trusts
and are also guaranteed by the Borrower under the Guaranties described in
the S-3 mentioned above (or similar guaranties provided for under subclause
(b) above).
"Subsidiary" or "Subsidiaries" shall mean any corporation or corporations
organized under the laws of any state of the United States of America,
Canada, or any province of Canada, which conduct(s) the major portion of
business in the United States of America or Canada and of which not less
than 50% of the voting stock of every class (except for directors'
qualifying shares), at the time as of which any determination is being
made, is owned by the Borrower either directly or indirectly through other
Subsidiaries.
"Type" shall mean, with respect to any Loan, any Alternate Base Rate Loan
or any Eurodollar Rate Loan.
2. THE LOANS
2.1 The Loans
(a) Subject to the terms and conditions and relying upon the
representations and warranties of the Borrower herein set forth,
each Bank severally agrees to make Loans to the Borrower on any
one or more Business Days prior to October 31, 2000, up to an
aggregate principal amount of Loans not exceeding at any time
outstanding the amount set opposite such Bank's name on the
signature pages hereof (such Bank's "Commitment"); provided,
however, that notwithstanding the foregoing or any other
provision to the contrary contained herein, the Borrower shall
only be entitled to request and receive up to four (4) separate,
new Loans hereunder, and each Bank's unused Commitment shall
automatically terminate without notice to the Borrower or any
other Person on the earlier to occur of October 31, 2000 or
immediately after the Agent has received and disbursed to the
Borrower such Bank's Pro Rata Percentage of the fourth new Loan
advance requested hereunder by the Borrower. The Borrower may
not borrow, repay and reborrow any Loan advanced hereunder.
However, prior to the Maturity Date, the Borrower shall be
entitled to request and receive "rollover" borrowings in
accordance with the other provisions of this Agreement for
purposes of continuing or converting the applicable rate of
interest to accrue on the principal balance of any outstanding
Loan hereunder for any subsequent Rate Period in accordance with
the other terms of this Agreement, but such rollover borrowings
alone shall not change the outstanding principal balance of the
Loans or be construed to make this Agreement or the credit
facility evidenced hereby a revolving credit facility.
<PAGE>
(b) The Borrower shall execute and deliver to the Agent for each
Bank to evidence the Loans made by each Bank under such Bank's
Commitment, a Note, which shall be: (i) dated the date of the
Closing Date; (ii) in the principal amount of such Bank's
maximum Commitment; (iii) in substantially the form attached
hereto as Exhibit A, with blanks appropriately filled; (iv)
payable to the order of such Bank on the Maturity Date; and (v)
subject to acceleration upon the occurrence of an Event of
Default. Each Note shall bear interest on the unpaid principal
amount thereof from time to time outstanding at the rate per
annum determined as specified in Sections 2.2(a), 2.2(b), 2.3(b)
and 2.3(c), payable on each Interest Payment Date and at
maturity, commencing with the first Interest Payment Date
following the date of each Note.
(c) Each Loan (or if applicable, the rollover of the principal
balance of any outstanding Loan hereunder for any subsequent
Rate Period) shall be: (i) in the case of any Eurodollar Rate
Loan, in an amount of not less than $1,000,000.00 or an integral
multiple of $1,000,000.00 in excess thereof; or (ii) in the case
of any Alternate Base Rate Loan, in an amount of not less than
$500,000.00 or an integral multiple of $100,000.00 in excess
thereof and, at the option of the Borrower, any borrowing under
this Section 2.1(c) may be comprised of two or more such Loans
bearing different rates of interest. Each such borrowing
(including the rollover of the principal balance of any Loan
hereunder for any subsequent Rate Period) shall be made upon
prior notice from the Borrower to the Agent in the form attached
hereto as Exhibit B (the "Notice of Borrowing") delivered to the
Agent not later than 11:00 am (Houston time): (i) on the third
Business Day prior to the Borrowing Date, if such borrowing
consists of Eurodollar Rate Loans; and (ii) on the Borrowing
Date, if such borrowing consists of Alternate Base Rate Loans.
Each Notice of Borrowing shall be irrevocable and shall specify:
(i) the amount of the proposed borrowing and of each Loan
comprising a part thereof; (ii) the Borrowing Date; (iii) the
rate of interest that each such Loan shall bear; (iv) the Rate
Period with respect to each such Loan and the Expiration Date of
each such Rate Period; and (v) with respect to each new Loan
advance requested in accordance with the terms of Section
2.2(a), the demand deposit account of the Borrower at The Chase
Manhattan Bank into which the proceeds of the borrowing are to
be deposited by the Agent. The Borrower may give the Agent
telephonic notice by the required time of any proposed borrowing
under this Section 2.1(c); provided that such telephonic notice
shall be confirmed in writing by delivery to the Agent promptly
(but in no event later than the Borrowing Date relating to any
such borrowing) of a Notice of Borrowing. Neither the Agent nor
any Bank shall incur any liability to the Borrower in acting
upon any telephonic notice referred to above which the Agent
believes in good faith to have been given by the Borrower, or
for otherwise acting in good faith under this Section 2.1(c).
(d) In the case of a proposed borrowing comprised of Eurodollar Rate
Loans, the Agent shall promptly notify each Bank of the
applicable interest rate under Section 2.2. With respect to each
new Loan advance requested by the Borrower in accordance with
the terms of Section 2.2(a), each Bank shall, before 11:00 am
(Houston time) on the Borrowing Date, make available for the
account of its Applicable Lending Office to the Agent at the
Agent's address set forth in Section 12.4, in same day funds,
its Pro Rata Percentage of such borrowing. After the Agent's
receipt of such funds and upon fulfillment of the applicable
conditions set forth in Section 7, on the Borrowing Date, the
Agent shall make the borrowing available to the Borrower at its
Applicable Lending Office in immediately available funds. Each
Bank shall post on a schedule attached to its Note(s): (i) the
date and principal amount of each Loan made under such Note;
(ii) the rate of interest each such Loan will bear; and (iii)
each payment of principal thereon; provided, however, that any
failure of such Bank so to mark such Note shall not affect the
Borrower's obligations thereunder; and provided further that
such Bank's records as to such matters shall be controlling
whether or not such Bank has so marked such Note. Any deposit to
the Borrower's demand deposit account by the Agent or by The
Chase Manhattan Bank (of funds received from the Agent) pursuant
to a request (whether written or oral) believed by the Agent or
by The Chase Manhattan Bank to be an authorized request by the
Borrower for a Loan hereunder shall be deemed to be a Loan
hereunder for all purposes with the same effect as if the
Borrower had in fact requested the Agent to make such Loan.
<PAGE>
(e) Unless the Agent shall have received notice from a Bank prior to
the date of any new Loan to be advanced hereunder that such Bank
will not make available to the Agent such Bank's Pro Rata
Percentage of such borrowing, the Agent may assume that such
Bank has made such portion available to the Agent on the date of
such borrowing in accordance with this Section 2.1 and the Agent
may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the
extent that such Bank shall not have so made such Pro Rata
Percentage available to the Agent, such Bank and the Borrower
severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each
day from the date such amount is made available to the Borrower
until the date such amount is repaid to the Agent, (i) in the
case of the Borrower, at the interest rate applicable at the
time to the Loans comprising such borrowing, and (ii) in the
case of such Bank, at the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Loan as part of such
borrowing for purposes of this Agreement.
(f) The failure of any Bank to make the Loan to be made by it as
part of any borrowing shall not relieve any other Bank of its
obligation, if any, hereunder to make its Loan on the date of
such borrowing, but no Bank shall be responsible for the failure
of any other Bank to make the Loan to be made by such other Bank
on the date of any borrowing.
2.2 Interest Rate Determination
(a) Except as specified in Sections 2.3(b) and 2.3(c), the Loans
shall bear interest on the unpaid principal amount thereof from
time to time outstanding, until maturity, at a rate per annum
(calculated based on a year of 360 days in the case of the
Eurodollar Rate or the Alternate Base Rate based on the Federal
Funds Rate and a year of 365 or 366 days, as the case may be, in
the case of the Alternate Base Rate based on the Prime Rate)
equal to the lesser of (A) the rate specified in the Notice of
Borrowing with respect thereto or (B) the Highest Lawful Rate
from the first day to, but not including, the Expiration Date of
the Rate Period then in effect with respect thereto.
(b) Any principal, interest, fees or other amount owing hereunder,
under any Note or under any other Loan Document that is not paid
when due (whether at stated maturity, by acceleration or
otherwise) shall bear interest at a rate per annum equal to the
lesser of (i) two percent (2%) above the Alternate Base Rate in
effect from time to time or (ii) the Highest Lawful Rate.
2.3 Additional Interest Rate Provisions
(a) The respective Note of each Bank may be held by the applicable
Bank for the account of its respective Domestic Lending Office
or its respective Eurodollar Lending Office, and may be
transferred from one to the other from time to time as each Bank
may determine.
(b) If the Borrower shall have chosen the Eurodollar Rate in a
Notice of Borrowing and prior to the Borrowing Date, any Bank in
good faith determines (which determination shall be conclusive)
that (i) deposits in Dollars in the principal amount of such
Eurodollar Rate Loan are not being offered to the Eurodollar
Lending Office of such Bank in the Eurodollar interbank market
selected by such Bank in its sole discretion in good faith or
(ii) adequate and reasonable means do not exist for ascertaining
the chosen Eurodollar Rate in respect of such Eurodollar Rate
Loan or (iii) the Eurodollar Rate for any Rate Period for such
Eurodollar Rate Loan will not adequately reflect the cost to
such Bank of making or maintaining such Eurodollar Rate Loan for
such Rate Period, then such Bank will so notify the Borrower and
the Agent and such Eurodollar Rate shall not become effective as
to such Eurodollar Rate Loan on such Borrowing Date or at any
time thereafter until such time thereafter as the Borrower
receives notice from the Agent that the circumstances giving
rise to such determination no longer apply.
<PAGE>
(c) Anything in this Agreement to the contrary notwithstanding, if
at any time any Bank in good faith determines (which
determination shall be conclusive) that the introduction of or
any change in any applicable law, rule or regulation or any
change in the interpretation or administration thereof by any
governmental or other regulatory authority charged with the
interpretation or administration thereof shall make it unlawful
for the Bank (or the Eurodollar Lending Office of such Bank) to
maintain or fund any Eurodollar Rate Loan, such Bank shall give
notice thereof to the Borrower and the Agent. With respect to
any Eurodollar Rate Loan which is outstanding when such Bank so
notifies the Borrower, upon such date as shall be specified in
such notice the Rate Period shall end and the lesser of (i) the
Alternate Base Rate or (ii) the Highest Lawful Rate shall
commence to apply in lieu of the Eurodollar Rate in respect of
such Eurodollar Rate Loan and shall continue to apply unless and
until the Borrower changes the rate as provided in Section
2.2(a). No more than five (5) Business Days after such specified
date, the Borrower shall pay to such Bank (x) accrued and unpaid
interest on such Eurodollar Rate Loan at the Eurodollar Rate in
effect at the time of such notice to but not including such
specified date plus (y) such amount or amounts (to the extent
that such amount or amounts would not be usurious under
applicable law) as may be necessary to compensate such Bank for
any direct or indirect costs and losses incurred by it (to the
extent that such amounts have not been included in the
Additional Costs in calculating such Eurodollar Rate), but
otherwise without penalty. If notice has been given by such Bank
pursuant to the foregoing provisions of this Section 2.3(c),
then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such notice no longer apply, such
Eurodollar Rate shall not again apply to such Loan or any other
Loan and the obligation of such Bank to continue any Eurodollar
Rate Loan as a Eurodollar Rate Loan shall be suspended. Any such
claim by such Bank for compensation under clause (y) above shall
be accompanied by a certificate setting forth the computation
upon which such claim is based, and such certificate shall be
conclusive and binding for all purposes, absent manifest error.
(d) THE BORROWER WILL INDEMNIFY EACH BANK AGAINST, AND REIMBURSE
EACH BANK ON DEMAND FOR, ANY LOSS (INCLUDING LOSS OF REASONABLY
ANTICIPATED PROFITS DETERMINED USING REASONABLE ATTRIBUTION AND
ALLOCATION METHODS), OR REASONABLE COST OR EXPENSE INCURRED OR
SUSTAINED BY SUCH BANK (INCLUDING WITHOUT LIMITATION, ANY LOSS
OR EXPENSE INCURRED BY REASON OF THE LIQUIDATION OR REEMPLOYMENT
OF DEPOSITS OR OTHER FUNDS ACQUIRED BY SUCH BANK TO FUND OR
MAINTAIN ANY EURODOLLAR RATE LOAN) AS A RESULT OF (i) ANY
ADDITIONAL COSTS INCURRED BY SUCH BANK; (ii) ANY PAYMENT OR
REPAYMENT (WHETHER AUTHORIZED OR REQUIRED HEREUNDER OR
OTHERWISE) OF ALL OR A PORTION OF ANY LOAN ON A DAY OTHER THAN
THE EXPIRATION DATE OF A RATE PERIOD FOR SUCH LOAN; (iii) ANY
PAYMENT OR PREPAYMENT (WHETHER REQUIRED HEREUNDER OR OTHERWISE)
OF ANY LOAN MADE AFTER THE DELIVERY OF A NOTICE OF BORROWING BUT
BEFORE THE APPLICABLE BORROWING DATE IF SUCH PAYMENT OR
PREPAYMENT PREVENTS THE PROPOSED BORROWING FROM BECOMING FULLY
EFFECTIVE; OR (iv) AFTER RECEIPT BY THE AGENT OF A NOTICE OF
BORROWING, THE FAILURE OF ANY LOAN TO BE MADE OR EFFECTED BY
SUCH BANK DUE TO ANY CONDITION PRECEDENT TO A BORROWING NOT
BEING SATISFIED BY THE BORROWER OR DUE TO ANY OTHER ACTION OR
INACTION OF THE BORROWER. ANY BANK DEMANDING PAYMENT UNDER THIS
SECTION 2.3(d) SHALL DELIVER TO THE BORROWER AND THE AGENT A
STATEMENT REASONABLY SETTING FORTH THE AMOUNT AND MANNER OF
DETERMINING SUCH LOSS, COST OR EXPENSE. THE FACTS SET FORTH IN
SUCH STATEMENT SHALL BE CONCLUSIVE AND BINDING FOR ALL PURPOSES,
ABSENT MANIFEST ERROR.
(e) If, after the date of this Agreement, any Bank shall have
determined that the adoption of any applicable law, rule,
guideline, interpretation or regulation regarding capital
adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such
Bank with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect
of reducing the rate of return on such Bank's capital as a
consequence of its obligations hereunder and under similar
lending arrangements to a level below that which such Bank could
have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be
material then the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for
such reduction.
<PAGE>
(f) A certificate of such Bank setting forth such amount or amounts
as shall be necessary to compensate such Bank as specified in
subparagraph (e) above shall be delivered as soon as practicable
to the Borrower (with a copy thereof to the agent) and to the
extent determined in accordance with subparagraph (e) above
shall be conclusive and binding, absent manifest error. The
Borrower shall pay such Bank the amount shown as due on any such
certificate within fifteen (15) days after such Bank delivers
such certificate. In preparing such certificate, such Bank may
employ such assumptions and allocations (consistently applied
with respect to advances made by such Bank or commitments by
such Bank to make advances) of costs and expenses as it shall in
good faith deem reasonable and may use any reasonable averaging
and attribution method (consistently applied with respect to
advances made by such Bank or commitments by such Bank to make
advances).
(g) In calculating the Eurodollar Rate payable under Section 4.1
hereof, and notwithstanding the provisions set forth in the
definitions of Eurodollar Rate, in the event that the ratings
for Borrower's unsecured, non-credit enhanced Senior Funded Debt
under Standard & Poor's Ratings Group and under Moody's Investor
Service, Inc. fall within different rating categories which are
not functional equivalents, the Eurodollar Rate shall be based
on the higher of such ratings if there is only one category
difference between the functional equivalents of such ratings,
and if there is a two category difference between the functional
equivalents of such ratings, the component of pricing from the
grid set forth in such definitions shall be based on the rating
category which is then in the middle of or between the two
category ratings which are then in effect.
2.4 Option to Extend the Maturity Date. Subject to the terms and
conditions set forth in this Section 2.4, the Borrower is hereby
granted the option to extend the Maturity Date to August 26, 2002, so
long as no Default then exists as of the date that the Borrower
elects to exercise such option or as of the initial August 27, 2001
Maturity Date hereunder. In order to validly exercise such option,
the Borrower must notify the Agent in writing, on or before June 27,
2001, of the Borrower's intent to exercise of such option to extend
the Maturity Date, and any such notice delivered to the Agent shall
be irrevocable. If such written notice is timely furnished to the
Agent by the Borrower, then effective as of the current Maturity Date
of August 27, 2001, the Maturity Date shall be deemed extended to
August 26, 2002 if (a) no Default exists on either the date that the
Agent receives from the Borrower such written notice of the
Borrower's intent to exercise such option or on the August 27, 2001
effective date of the extension of the Maturity Date, and (b) the
Borrower pays to the Agent, for the ratable benefit of the Banks, on
the August 17, 2001 effective date of such extension of the Maturity
Date an extension fee equal to 0.125% the aggregate principal
balances of the Loans outstanding on the August 27, 2001 effective
date such extension of the Maturity Date. Promptly after receipt of
such notice from the Borrower of its intent to exercise such option
to extend the Maturity Date in accordance with the provisions of this
Section 2.4, the Agent shall notify the Banks of the Agent's receipt
of such notice. Upon the effective date of the extension of the
Maturity Date in accordance with the provisions of this Section 2.4,
the Maturity Date of each Note shall be deemed to be extended to
August 26, 2002, the terms and conditions of this Agreement will
apply during such extension period, and from and after the August 27,
2001 effective date of such extension, the term "Maturity Date" shall
mean August 26, 2002.
3. PAYMENTS AND PREPAYMENTS
3.1 Required Prepayments. The Borrower agrees to make prepayments of the
Loans as follows:
(a) If at any time the Agent determines that the aggregate principal
amount of Loans outstanding exceeds the Commitments, then the
Borrower shall make a prepayment of principal of the Loans in an
amount at least equal to such excess;
(b) If all of the Pending Acquisitions have not been finalized and
fully consummated on or before October 31, 2000, then unless the
Majority Banks otherwise consent in writing (to be delivered to
the Agent on or before November 15, 2000) to waive the
prepayment of the Loans otherwise required below in this Section
3.1, the Loans then outstanding shall be prepaid by the Borrower
on or before December 31, 2000 in the amount necessary to cause
the aggregate principal amount of the Loans outstanding on
December 31, 2000 to not exceed the sum of the following
specified amounts for the Pending Acquisition(s) finalized and
fully consummated by the Borrower on or before October 31, 2000:
<PAGE>
(i) Fall River Gas Company acquisition - $30,000,000.00 plus the
lesser of (1) $20,000,000.00 or (2) the aggregate amount of
Loan proceeds utilized for refinancing of existing Debt of
Fall River Gas Company;
(ii)Providence Energy Corporation acquisition - $290,000,000.00
plus the lesser of (1) $85,000,000.00 or (2) the aggregate
amount of Loan proceeds utilized for refinancing of existing
Debt of Providence Energy Corporation ; and
(iii)Valley Resources, Inc. acquisition - $135,000,000.00 plus
the lesser of (1) $30,000,000.00 or (2) the aggregate
amount of Loan proceeds utilized for refinancing of
existing Debt of Valley Resources, Inc.
(c) If any stock or other equity securities in Capstone Turbine
Corporation now or hereafter owned by the Borrower or any of its
Subsidiaries is sold or otherwise liquidated at any time after
the Closing Date by the Borrower or its applicable Subsidiary,
the Loans then outstanding shall be prepaid by the Borrower in
an amount equal to (i) the net proceeds (i.e., gross proceeds
received less (1) ordinary and customary commissions and other
related sales costs and (2) the tax liability of the Borrower or
its Subsidiary, as applicable, resulting from such sale or
disposition) received by the Borrower or its applicable
Subsidiary from such sale or other disposition of the applicable
Capstone Turbine Corporation stock or other equity securities
less (ii) $10,000,000.00, with such prepayment to be made in
full on or before five (5) Business Days after the date of the
applicable sale or disposition of such stock or other equity
securities.
3.2 Repayment of the Loans. Borrower shall repay the principal amount of
each Loan, on the last day of the Rate Period for such Loan, together
with all accrued and unpaid interest thereon as of such date,
irrespective of any claim, set off, defense, or other right which the
Borrower may have at any time against any Bank, the Agent or any
other Person; provided, however, that in lieu of such repayment of
the principal amount of the applicable Loan on the last day of the
Rate Period for such Loan, the Borrower may, to the extent otherwise
permitted hereunder, rollover the outstanding principal balance of
such applicable Loan for an additional Rate Period pursuant to a
Notice of Borrowings submitted by the Borrower under the terms of
Section 2.1(c).
3.3 Place of Payment or Prepayment. All payments and prepayments made in
accordance with the provisions of this Agreement or of the Notes or
of any other Loan Document in respect of commitment fees or of
principal or interest on the Notes shall be made to the Agent for the
account of the Banks at its Domestic Lending Office, no later than
noon, Houston time, in immediately available funds. Unless the Agent
shall have received notice from the Borrower prior to the date on
which any payment is due to the Banks hereunder that the Borrower
will not make any payment due hereunder in full, the Agent may assume
that the Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the
amount then due to such Bank. If and to the extent the Borrower shall
not have so made such payment in full to the Agent, each Bank shall
repay to the Agent forthwith on demand such amount distributed to
such Bank together with interest thereon, for each day from the date
such amount is distributed to such Bank until the date such Bank
repays such amount to the Agent, at the Federal Funds Rate. If and to
the extent that the Agent receives any payment or prepayment from the
Borrower and fails to distribute such payment or prepayment to the
Banks ratably on the basis of their respective Pro Rata Percentage on
the day the Agent receives such payment or prepayment, and such
distribution shall not be so made by the Agent in full on the
required day, the Agent shall pay to each Bank such Bank's Pro Rata
Percentage thereof together with interest thereon at the Federal
Funds Rate for each day from the date such amount is paid to the
Agent by the Borrower until the date the Agent pays such amount to
such Bank.
3.4 No Prepayment Premium or Penalty. Each prepayment pursuant to
Section 3.1 or 3.3 shall be without premium or penalty, subject in
the case of Eurodollar Rate Loans to the provisions of Section
2.3(d).
<PAGE>
3.5 Taxes. All payments (whether of principal, interest, reimbursements
or otherwise) under this Agreement or on the Notes shall be made by
the Borrower without set off or counterclaim and shall be made free
and clear of and without deduction for any present or future tax,
levy, impost or any other charge, if any, of any nature whatsoever
now or hereafter imposed by any taxing authority. If the making of
such payments is prohibited by law, unless such a tax, levy, impost
or other charge is deducted or withheld therefrom, the Borrower shall
pay to the Banks, on the date of each such payment, such additional
amounts as may be necessary in order that the net amounts received by
the Banks after such deduction or withholding shall equal the amounts
which would have been received if such deduction or withholding were
not required.
3.6 Reduction or Termination of Commitments. The Borrower may at any time
or from time to time reduce or terminate the Commitment of each Bank
by giving not less than ten (10) full Business Days' prior written
notice to such effect to the Agent, provided that any partial
reduction shall be in the amount of $1,000,000.00 or an integral
multiple thereof. Concurrently with each such reduction or
termination, all amounts in excess of the reduced Commitments shall
be automatically due and payable and it is a condition to the
effectiveness of such reduction that the Borrower shall immediately
prepay the entire amount of such excess together with all accrued
interest thereon and such other amounts that may be required to be
paid in consequence of such prepayment under Section 2.3(d). Promptly
after the Agent's receipt of such notice of reduction, the Agent
shall notify each Bank of the proposed reduction and such reduction
shall be effective on the date specified in the Borrower's notice
with respect to such reduction and shall reduce the Commitment of
each Bank proportionately in accordance with its Pro Rata Percentage.
After each such reduction, the commitment fee shall be calculated
upon the Commitments as so reduced. The Commitment of each Bank shall
automatically terminate on the Maturity Date or in the event of
acceleration of the maturity date of the Notes. Additionally, as
provided for under Section 2.1(a), each Bank's unused Commitment
shall automatically terminate without notice to the Borrower or any
other Person on the earlier to occur of October 31, 2000 or
immediately after the Agent has received and disbursed to the
Borrower such Bank's Pro Rata Percentage of the fourth new Loan
advance requested hereunder by the Borrower. Each reduction of the
Commitment hereunder shall be irrevocable.
4. COMMITMENT FEE AND OTHER FEES
4.1 Commitment Fee. The Borrower agrees to pay to the Agent for the
account of each Bank a commitment fee based on a year of 360 days,
from the Closing Date to, but not including, October 31, 2000 (or
such earlier date that all unused Commitments shall have terminated
under the terms of Section 2.1(a)), on the daily average unused
amount of each Bank's Commitment, such commitment fee to be payable
in arrears on October 31, 2000 (or such earlier date that all unused
Commitments shall have terminated under the terms of Section 2.1(a)),
at a rate per annum equal to 0.130%.
4.2 Fees Not Interest; Nonpayment. The fees described in this Agreement
represent compensation for services rendered and to be rendered
separate and apart from the lending of money or the provision of
credit and do not constitute compensation for the use, detention, or
forbearance of money, and the obligation of the Borrower to pay each
fee described herein shall be in addition to, and not in lieu of, the
obligation of the Borrower to pay interest, other fees described in
this Agreement, and expenses otherwise described in this Agreement.
Fees shall be payable when due in Dollars and in immediately
available funds. The commitment fee referred to in Section 4.1 shall
be non-refundable, and shall, to the fullest extent permitted by law,
bear interest, if not paid when due, at a rate per annum equal to the
lesser of (a) five percent (5%) above the Alternate Base Rate as in
effect from time to time or (b) the Highest Lawful Rate.
5. APPLICATION OF PROCEEDS. The Borrower agrees that the proceeds of the
Loans shall be used to finance the costs and expenses incurred by the
Borrower in finalizing and consummating any of the Pending Acquisitions,
including without limitation, the refinancing of existing Debt of the
entity acquired by the Borrower under the applicable Pending Acquisition;
provided, however, that the aggregate amount of Loan proceeds utilized
by the Borrower in excess of $450,000,000.00 shall only be utilized for
refinancing of existing Debt of one or more of the entities acquired by the
Borrower under the Pending Acquisitions; and provided further, however,
that the aggregate amount of Loan proceeds utilized by Borrower shall not
exceed in the aggregate the following specified amount for the applicable
Pending Acquisition and in no event whatsoever shall the aggregate
principal balances of the Loans outstanding exceed the Commitments:
(a) $50,000,000.00 for the Fall River Gas Company acquisition;
<PAGE>
(b) $375,000,000.00 for the Providence Energy Corporation acquisition;
and
(c) $165,000,000.00 for the Valley Resources, Inc. acquisition.
6. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
6.1 Organization and Qualification. The Borrower and each Subsidiary: (a)
are corporations duly organized, validly existing, and in good
standing under the laws of their respective states of incorporation;
(b) have the corporate or organizational power to own their
respective properties and to carry on their respective businesses as
now conducted; and (c) are duly qualified as foreign corporations
(or, in the case of any Southern Union Trust, trusts) to do business
and are in good standing in every jurisdiction where such
qualification is necessary except when the failure to so qualify
would not or does not have a Material Adverse Effect. The Borrower is
a corporation organized under the laws of Delaware and has the
Subsidiaries listed on Schedule 6.1 attached hereto and hereby made a
part hereof for all purposes, and no others, each of which is a
Delaware corporation unless otherwise noted. None of the Subsidiaries
listed on Schedule 6.1 as "Inactive Subsidiaries," conducts or will
conduct any business, and none of such Subsidiaries has any assets
other than minimum legal capitalization.
6.2 Financial Statements. The Borrower has furnished the Banks with (a)
the Borrower's annual audit report containing the Borrower's
consolidated balance sheet, statements of income and stockholder's
equity and a cash flow statement as at and for the twelve month
period ending June 30, 1999, accompanied by the certificate of Price
Waterhouse Coopers and (b) the Borrower's unaudited financial report
as of the fiscal quarter ending March 31, 2000. These statements are
complete and correct and present fairly in accordance with GAAP,
consistently applied throughout the periods involved, the
consolidated financial position of the Borrower and the Subsidiaries
and the results of its and their operations as at the dates and for
the periods indicated subject, as to interim statements only, to
changes resulting from customary end-of-year credit adjustments which
in the aggregate will not be material. There has been no material
adverse change in the condition, financial or otherwise, of the
Borrower or any Subsidiary since March 31, 2000.
6.3 Litigation. Except as disclosed on Schedule 6.3 or pursuant to
Section 6.16, there is no: (a) action or proceeding pending or, to
the knowledge of the Borrower, threatened against the Borrower or any
Subsidiary before any court, administrative agency or arbitrator
which is reasonably expected to have a Material Adverse Effect; (b)
judgment outstanding against the Borrower for the payment of money;
or (c) other outstanding judgment, order or decree affecting the
Borrower or any Subsidiary before or by any administrative or
governmental authority, compliance with or satisfaction of which may
reasonably be expected to have a Material Adverse Effect.
6.4 Default. Neither the Borrower nor any Subsidiary is in default under
or in violation of the provisions of any instrument evidencing any
Debt or of any agreement relating thereto or any judgment, order,
writ, injunction or decree of any court or any order, law, regulation
or demand of any administrative or governmental instrumentality which
default or violation might have a Material Adverse Effect.
6.5 Title to Assets. The Borrower and each Subsidiary have good and
marketable title to their respective assets, subject to no Liens
except those permitted in Section 9.2.
6.6 Payment of Taxes. The Borrower and each Subsidiary have filed all tax
returns required to be filed and have paid all taxes shown on said
returns and all assessments which are due and payable (except such as
are being contested in good faith by appropriate proceedings for
which adequate reserves for their payment have been provided in a
manner consistent with the accounting practices followed by the
Borrower as of March 31, 2000). The Borrower is not aware of any
pending investigation by any taxing authority or of any claims by any
governmental authority for any unpaid taxes, except as disclosed on
Schedule 6.6.
<PAGE>
6.7 Conflicting or Adverse Agreements or Restrictions. Neither the
Borrower nor any Subsidiary is a party to any contract or agreement
or subject to any restriction which would have a Material Adverse
Effect. Neither the execution and delivery of this Agreement or the
Notes or any other Loan Document nor the consummation of the
transactions contemplated hereby nor fulfillment of and compliance
with the respective terms, conditions and provisions hereof or of the
Notes or of any instruments required hereby will conflict with or
result in a breach of any of the terms, conditions or provisions of,
or constitute a default under, or result in any violation of, or
result in the creation or imposition of any lien (other than as
contemplated or permitted by this Agreement) on any of the property
of the Borrower or any Subsidiary pursuant to (a) the charter or
bylaws applicable to the Borrower or any Subsidiary; (b) any law or
any regulation of any administrative or governmental instrumentality;
(c) any order, writ, injunction or decree of any court; or (d) the
terms, conditions or provisions of any agreement or instrument to
which the Borrower or any Subsidiary is a party or by which it is
bound or to which it is subject.
6.8 Authorization, Validity, Etc. The Borrower has the corporate power
and authority to make, execute, deliver and carry out this Agreement
and the transactions contemplated herein, to make the borrowings
provided for herein, to execute and deliver the Notes and to perform
its obligations hereunder and under the Notes and the other Loan
Documents to which it is a party and all such action has been duly
authorized by all necessary corporate proceedings on its part. This
Agreement has been duly and validly executed and delivered by the
Borrower and constitutes the valid and legally binding agreement of
the Borrower enforceable in accordance with its terms, except as
limited by Debtor Laws; and the Notes and the other Loan Documents,
when duly executed and delivered by the Borrower pursuant to the
provisions hereof, will constitute the valid and legally binding
obligation of the Borrower enforceable in accordance with the terms
thereof and of this Agreement, except as limited by Debtor Laws.
6.9 Investment Company Act Not Applicable. Neither the Borrower nor
any Subsidiary is an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
6.10 Public Utility Holding Company Act Not Applicable. Neither the
Borrower nor any Subsidiary is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding
company", or an affiliate of a "subsidiary company" of a "holding
company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
6.11 Regulations G, T, U and X. No Loan shall be a "purpose credit secured
directly or indirectly by margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System
("margin stock"); none of the proceeds of any Loan will be used to
extend credit to others for the purpose of purchasing or carrying any
margin stock, or for any other purpose which would constitute this
transaction a "purpose credit secured directly or indirectly by
margin stock" within the meaning of said Regulation U, as now in
effect or as the same may hereafter be in effect. Neither the
Borrower nor any Subsidiary will take or permit any action which
would involve the Banks in a violation of Regulation G, Regulation T,
Regulation U, Regulation X or any other regulation of the Board of
Governors of the Federal Reserve System or a violation of the
Securities Exchange Act of 1934, in each case as now or hereafter in
effect. Not more than twenty-five percent (25%) of the value (as
determined by any reasonable method) of the assets subject to the
negative pledge set forth in Section 9.2 of the Credit Agreement and
the restrictions on disposition of assets set forth in Section 9.8 of
the Credit Agreement is represented by margin stock.
<PAGE>
6.12 ERISA. No Reportable Event (as defined in ss. 4043(b) of ERISA) has
occurred with respect to any Plan. Each Plan complies in all material
respects with all applicable provisions of ERISA, and the Borrower
and each Subsidiary have filed all reports required by ERISA and the
Code to be filed with respect to each Plan. The Borrower has no
knowledge of any event which could result in a liability of the
Borrower or any Subsidiary to the Pension Benefit Guaranty
Corporation. The Borrower and each Subsidiary have met all
requirements with respect to funding the Plans imposed by ERISA or
the Code. Since the effective date of Title IV of ERISA, there have
not been any, nor are there now existing any, events or conditions
that would permit any Plan to be terminated under circumstances which
would cause the lien provided under ss. 4068 of ERISA to attach to
any property of the Borrower or any Subsidiary. The value of the
Plans' benefits guaranteed under Title IV of ERISA on the date hereof
does not exceed the value of such Plans' assets allocable to such
benefits as of the date of this Agreement and shall not be permitted
to do so hereafter.
6.13 No Financing of Certain Security Acquisitions. None of the proceeds
of any Loan will be used to acquire any security in any transaction
that is subject to ss.13 or ss.14 of the Securities Exchange Act of
1934, as amended.
6.14 Franchises, Co-Licenses, Etc. The Borrower and each Subsidiary own or
have obtained all the material governmental permits, certificates of
authority, leases, patents, trademarks, service marks, trade names,
copyrights, franchises and licenses, and rights with respect thereto,
required or necessary (or, in the sole and independent judgment of
the Borrower, prudent) in connection with the conduct of their
respective businesses as presently conducted or as proposed to be
conducted.
6.15 Lines of Business. The nature of the Borrower's lines of business are
predominately the following: (a) the operation of energy distribution
and transportation services, including without limitation, natural
gas sales and transportation and distribution, propane sales and
distribution and promotion, marketing and sale of compressed natural
gas and liquified natural gas; (b) the development and marketing of
fuel cell and distributive energy options; (c) electric
marketing/generation; (d) the operation of fuel oil distribution and
transportation networks; and (e) sales and rentals of appliances
utilizing one or more of the fuel or energy options specified in this
Section 6.15.
6.14 Environmental Matters. Except as disclosed in Schedule 6.16, all
facilities and property owned or leased by the Borrower or any
Subsidiary have been and continue to be, owned or leased and operated
by the Borrower and each Subsidiary in material compliance with all
Environmental Laws; (i) there has not been (during the period of the
Borrower's, or a Subsidiary's ownership or lease) any Release of
Hazardous Materials at, on or under any property now (or, to the
Borrower's knowledge, previously) owned or leased by the Borrower or
any Subsidiary (A) in quantities that would be required to be
reported under any Environmental Law, (B) that required, or may
reasonably be expected to require, the Borrower to expend funds on
remediation or cleanup activities pursuant to any Environmental Law
except for remediation or clean-up activities that would not be
reasonably expected to have a Material Adverse Effect, or (C) that
otherwise, singly or in the aggregate, has, or may reasonably be
expected to have, a Material Adverse Effect; (ii) the Borrower and
each Subsidiary have been issued and are in material compliance with
all permits, certificates, approvals, orders, licenses and other
authorizations relating to environmental matters necessary for their
respective businesses; and (iii) there are no polychlorinated
biphenyls (PCB's) or asbestos-containing materials or surface
impoundments in any of the facilities now (or, to the knowledge of
the Borrower, previously) owned or leased by the Borrower or any
Subsidiary, except for asbestos-containing materials of the type and
in quantities that, to the knowledge of the borrower, do not
currently require remediation, and if remediation of such
asbestos-containing materials is hereafter required for any reason,
such remediation activities would not reasonably be expected to have
a Material Adverse Effect; (iv) Hazardous Materials have not been
generated, used, treated, recycled, stored or disposed of in any of
the facilities or on any of the property now (or, to the knowledge of
the Borrower, previously) owned or leased by the Borrower or any
Subsidiary during the time of the Borrower's or such Subsidiary's
ownership or leased by the Borrower or any Subsidiary during the time
of the Borrower's or such Subsidiary's ownership except in material
compliance with all applicable Environmental Laws; and (v) all
underground storage tanks located on the property now (or, to the
knowledge of the Borrower, previously) owned or leased by the
Borrower or any Subsidiary have been (and to the extent currently
owned or leased are) operated in material compliance with all
applicable Environmental Laws.
7. CONDITIONS
The obligation of the Banks to make any Loans is subject to the following
conditions:
7.1 Representations True and No Defaults
(a) The representations and warranties contained in Section 6 shall
be true and correct on and as of the particular Borrowing Date
as though made on and as of such date;
<PAGE>
(b) The Borrower shall not be in default in the due performance of
any covenant on its part contained in this Agreement;
(c) No material adverse change shall have occurred with respect to
the business, assets, properties or condition (financial or
otherwise) of the Borrower reflected in the quarterly financial
statements of the Borrower dated March 31, 2000 (copies of such
audited financial statements having been supplied to the Agent
and each Bank); and
(d) No Event of Default or Default shall have occurred and be
continuing.
7.2 Governmental Approvals. The Borrower shall have obtained all orders,
approvals or consents of all public regulatory bodies required for
the making and carrying out of this Agreement, the making of the
borrowings pursuant hereto and the issuance of the Notes to evidence
such borrowings.
7.3 Compliance With Law. The business and operations of the Borrower and
each Subsidiary as conducted at all times relevant to the
transactions contemplated by this Agreement to and including the
close of business on the particular Borrowing Date shall have been
and shall be in compliance in all material respects with all
applicable State and Federal laws, regulations and orders affecting
the Borrower and each Subsidiary and the business and operations of
any of them.
7.4 Notice of Borrowing and Other Documents. On each Borrowing Date, the
Banks shall have received (a) a Notice of Borrowing; and (b) such
other documents and certificates relating to the transactions herein
contemplated as the Banks may reasonably request.
7.5 Payment of Fees and Expenses. The Borrower shall have paid (a) all
expenses of the type described in Section 12.3 through the date of
such Loan or the issuance of such Facility Letter of Credit
and (b) all closing, structuring and other invoiced fees owed as
of the Closing Date to the Agent, any of the Banks and/or Chase
Securities Inc. by the Borrower under this Agreement or any other
written agreement between the Borrower and the Agent, the
applicable Bank(s) or Chase Securities Inc. The Borrower hereby
agrees to fully pay on the Closing Date all of such expenses,
closing, structuring and other fees described in the preceding
sentence that are then owing on the Closing Date, to the extent
that Borrower has been presented an invoice for the same on or before
the Closing Date.
7.6 Loan Documents, Opinions and Other Instruments. As of the Closing
Date, the Borrower shall have delivered to the Agent the following:
(a) this Agreement, each of the Notes and all other Loan Documents
required by the Agent and the Banks to be executed and delivered by
the Borrower in connection with this Agreement; (b) a certificate
from the Secretary of State of the State of Delaware as to the
continued existence and good standing of the Borrower in the State of
Delaware; (c) a certificate from Secretary of State of the State of
Texas as to the continued qualification of the Borrower to do
business in the State of Texas; (d) a current certificate from the
Office of the Comptroller of the State of Texas as to the good
standing of the Borrower in the State of Texas; (e) a Secretary's
Certificate executed by the duly elected Secretary or a duly elected
Assistant Secretary of the Borrower, in a form acceptable to the
Agent, whereby such Secretary or Assistant Secretary certifies that
one or more corporate resolutions adopted by the Board of Directors
of the Borrower remain in full force and effect authorizing the
Borrower to secure Loans in accordance with the terms of this
Agreement; and (f) a legal opinion from in-house counsel for the
Borrower, dated as of the Closing Date, addressed to the Agent and
the Lenders and otherwise acceptable in all respects to the Agent in
its discretion.
7.7 Consummation of Applicable Pending Acquisition. The applicable
Pending Acquisition for which Borrower is requesting a new Loan
hereunder to be utilized for payment of costs and expenses related to
such Pending Acquisition shall be consummated and finalized prior to
or contemporaneously with the funding of such requested new Loan.
<PAGE>
7.8 Investment Services Ratings. With respect to the advance and funding
of the initial Loan hereunder, the Agent shall have been furnished
with a letter from each of Standard & Poor's Ratings Group and
Moody's Investor Service, Inc. reflecting that the then current
ratings for Borrower's unsecured, non-credit enhanced Senior Funded
Debt as of the date of funding of such initial Loan hereunder is not
less than BBB- by Standard & Poor's Ratings Group and not less than
Baa3 by Moody's Investor Service, Inc. Additionally, with respect to
each subsequent advance and funding of any new Loan requested
hereunder by the Borrower after the advance and funding of the
initial Loan (but excluding any "rollover" borrowings made in
accordance with the other provisions of this Agreement), the Agent
shall not have received written notice from Borrower or any Bank that
the then current rating for Borrower's unsecured, non-credit enhanced
Senior Funded Debt as of the date of funding of such subsequent Loan
has fallen below BBB-, as determined by Standard & Poor's Ratings
Group, or below Baa3, as determined by Moody's Investor Service, Inc.
The submission by Borrower to the Agent of any Notice of Borrowing
requesting the advance and funding of any new Loan hereunder
(excluding any "rollover" borrowings made in accordance with the
other provisions of this Agreement) shall constitute a representation
and warranty by Borrower to the Agent and the Banks that Borrower has
not received any notice that Borrower's unsecured, non-credit
enhanced Senior Funded Debt, as of the date of submission of such
Notice of Borrowing, has fallen below BBB- , as determined by
Standard & Poor's Ratings Group, or below Baa3, as determined by
Moody's Investor Service, Inc.
8. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as the Borrower may borrow
hereunder (including rollover borrowings discussed under Section 2.1(a))
and until payment in full of the Notes, and its other obligations under
this Agreement and the other Loan Documents the Borrower will:
8.1 Financial Statements and Information. Deliver to the Banks:
(a) as soon as available, and in any event within 120 days after the
end of each fiscal year of the Borrower, a copy of the annual
audit report of the Borrower and the Subsidiaries for such
fiscal year containing a balance sheet, statements of income and
stockholders equity and a cash flow statement, all in reasonable
detail and certified by Price Waterhouse Coopers or another
independent certified public accountant of recognized standing
satisfactory to the Banks. The Borrower will obtain from such
accountants and deliver to the Banks at the time said financial
statements are delivered the written statement of the
accountants that in making the examination necessary to said
certification they have obtained no knowledge of any Event of
Default or Default, or if such accountants shall have obtained
knowledge of any such Event of Default or Default, they shall
state the nature and period of existence thereof in such
statement; provided that such accountants shall not be liable
directly or indirectly to the Banks for failure to obtain
knowledge of any such Event of Default or Default; and
(b) as soon as available, and in any event within sixty (60) days
after the end of each quarterly accounting period in each fiscal
year of the Borrower (excluding the fourth quarter), an
unaudited financial report of the Borrower and the Subsidiaries
as at the end of such quarter and for the period then ended,
containing a balance sheet, statements of income and
stockholders equity and a cash flow statement, all in reasonable
detail and certified by a financial officer of the Borrower to
have been prepared in accordance with GAAP, except as may be
explained in such certificate; and
(c) copies of all statements and reports sent to stockholders of
the Borrower or filed with the Securities and Exchange
Commission; and
(d) such additional financial or other information as the Banks may
reasonably request including, without limitation, copies of such
monthly, quarterly, and annual reports of gas purchases and
sales that the Borrower is required to deliver to or file with
governmental bodies pursuant to tariffs and/or franchise
agreements.
<PAGE>
All financial statements specified in clauses (a) and (b) above shall
be furnished in consolidated and consolidating form for the Borrower
and all Subsidiaries with comparative consolidated figures for the
corresponding period in the preceding year. Together with each
delivery of financial statements required by clauses (a) and (b)
above, the Borrower will deliver to the Banks (i) such schedules,
computations and other information as may be required to demonstrate
that the Borrower is in compliance with its covenants in Section 9.1
or reflecting any noncompliance therewith as at the applicable date
and (ii) an Officer's Certificate stating that there exists no Event
of Default or Default, or, if any such Event of Default or Default
exists, stating the nature thereof, the period of existence thereof
and what action the Borrower has taken or proposes to take with
respect thereto. The Banks are authorized to deliver a copy of any
financial statement delivered to it to any regulatory body having
jurisdiction over them, and to disclose same to any prospective
assignees or participant Lenders.
8.2 Lease and Investment Schedules. Deliver to the Banks:
(a) from time to time and, in any event, with each delivery of
annual financial statements under Section 8.1(a), a current,
complete schedule (in the form of Schedule 8.2) of all
agreements to rent or lease any property (personal, real or
mixed, but not including oil and gas leases) to which the
Borrower or any Subsidiary is a party lessee and which,
considered independently or collectively with other leases with
the same lessor, involve an obligation by the Borrower or a
Subsidiary to make payments of at least $250,000.00 in any year,
showing the total amounts payable under each such agreement, the
amounts and due dates of payments thereunder and containing a
description of the rented or leased property, and all other
information the Majority Banks may request; and
(b) with each delivery of annual financial statements under Section
8.1(a) a current complete schedule (in the form of Schedule 8.2)
listing all debt exceeding $200,000.00 in principal amount
outstanding and equity owned or held by the Borrower or any
Subsidiary containing all information required by, and in a form
satisfactory to, the Banks, except for such debt or equity of
Subsidiaries.
8.3 Books and Records. Maintain, and cause each Subsidiary to maintain,
proper books of record and account in accordance with sound
accounting practices in which true, full and correct entries will be
made of all their respective dealings and business affairs.
8.4 Insurance. Maintain, and cause each Subsidiary to maintain, insurance
with financially sound, responsible and reputable companies in such
types and amounts and against such casualties, risks and
contingencies as is customarily carried by owners of similar
businesses and properties, and furnish to the Banks, together with
each delivery of annual financial statements under Section 8.1(a), an
Officer's Certificate containing full information as to the insurance
carried.
8.5 Maintenance of Property. Cause its Significant Property and the
Significant Property of each Subsidiary to be maintained, preserved,
protected and kept in good repair, working order and condition so
that the business carried on in connection therewith may be conducted
properly and efficiently, except for normal wear and tear; provided,
however, that the improved properties of Lavaca Realty Company should
be maintained, preserved and protected in a manner consistent with
the maintenance, preservation and protection of improved real
property held for sale.
8.6 Inspection of Property and Records. Permit any officer, director or
agent of the Agent or any Bank, on written notice and at such Banks
expense, to visit and inspect during normal business hours any of the
properties, corporate books and financial records of the Borrower and
each Subsidiary and discuss their respective affairs and finances
with their principal officers, all at such times as the Agent or any
Bank may reasonably request.
8.7 Existence, Laws, Obligations. Maintain, and cause each Subsidiary to
maintain, its corporate existence and franchises, and any license
agreements and tariffs that permit the recovery of a return that the
Borrower considers to be fair (and as to licenses, franchises, and
tariffs that are subject to regulatory determinations of recovery of
returns, the Borrower has presented or is presenting favorable
defense thereof); and to comply, and cause each Subsidiary to comply,
with all statutes and governmental regulations noncompliance with
which might have a Material Adverse Effect, and pay, and cause each
Subsidiary to pay, all taxes, assessments, governmental charges,
claims for labor, supplies, rent and other obligations which if
unpaid might become a lien against the property of the Borrower or
any Subsidiary except liabilities being contested in good faith.
Notwithstanding the foregoing, the Borrower may dissolve those
certain inactive and minimally capitalized Subsidiaries designated as
such on Schedule 6.1.
<PAGE>
8.8 Notice of Certain Matters. Notify the Agent Bank immediately upon
acquiring knowledge of the occurrence of any of the following events:
(a) the institution or threatened institution of any lawsuit or
administrative proceeding affecting the Borrower or any Subsidiary
that is not covered by insurance (less applicable deductible amounts)
and which, if determined adversely to the Borrower or such
Subsidiary, could reasonably be expected to have a Material Adverse
Effect; (b) the occurrence of any material adverse change, or of any
event that in the good faith opinion of the Borrower is likely, to
result in a material adverse change, in the assets, liabilities,
financial condition, business or affairs of the Borrower or any
Subsidiary; (c) the occurrence of any Event of Default or any
Default; or (d) a change by Moody's Investors Service, Inc. or by
Standard and Poor's Ratings Group in the rating of the Borrower's
Funded Debt.
8.9 ERISA. At all times:
(a) maintain and keep in full force and effect each Plan;
(b) make contributions to each Plan in a timely manner and in an
amount sufficient to comply with the minimum funding standards
requirements of ERISA;
(c) immediately upon acquiring knowledge of any "reportable event"
or of any "prohibited transaction" (as such terms are defined in
the Code ss. 4043) in connection with any Plan, furnish the
Banks with a statement executed by the president or chief
financial officer of the Borrower setting forth the details
thereof and the action which the Borrower proposes to take with
respect thereto and, when known, any action taken by the
Internal Revenue Service with respect thereto;
(d) notify the Banks promptly upon receipt by the Borrower or any
Subsidiary of any notice of the institution of any proceeding or
other action which may result in the termination of any Plan and
furnish to the Banks copies of such notice;
(e) acquire and maintain in amounts satisfactory to the Banks from
either the Pension Benefit Guaranty Corporation or authorized
private insurers, when available, the contingent employer
liability coverage insurance required under ERISA;
(f) furnish the Banks with copies of the summary annual report for
each Plan filed with the Internal Revenue Service as the Agent
or the Banks may request; and
(g) furnish the Banks with copies of any request for waiver of the
funding standards or extension of the amortization periods
required by ss. 303 and ss. 304 of ERISA or ss. 412 of the Code
promptly after the request is submitted to the Secretary of the
Treasury, the Department of Labor or the Internal Revenue
Service, as the case may be.
8.10 Compliance with Environmental Laws. At all times:
(a) use and operate, and cause each Subsidiary to use and operate,
all of their respective facilities and properties in material
compliance with all Environmental Laws; keep, and cause each
Subsidiary to keep, all necessary permits, approvals, orders,
certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material
compliance therewith; handle, and cause each Subsidiary to
handle, all Hazardous Materials in material compliance with all
applicable Environmental Laws; and dispose, and cause each
Subsidiary to dispose, of all Hazardous Materials generated by
the Borrower or any Subsidiary or at any property owned or
leased by them at facilities or with carriers that maintain
valid permits, approvals, certificates, licenses or other
authorizations for such disposal under applicable Environmental
Laws;
<PAGE>
(b) promptly notify the Agent and provide copies upon receipt of all
written claims, complaints, notices or inquiries relating to the
condition of the facilities and properties of the Borrower and
each Subsidiary under, or their respective compliance with,
applicable Environmental Laws wherein the condition or the
noncompliance that is the subject of such claim, complaint,
notice, or inquiry involves, or could reasonably be expected to
involve, liability of or expenditures by the Borrower and its
Subsidiaries of $10,000,000.00 or more; and
(c) provide such information and certifications which the Banks may
reasonably request from time to time to evidence compliance with
this Section 8.10.
8.11 PGA Clauses. The Borrower will use its best efforts to maintain in
force provisions in all of its tariffs and franchise agreements that
permit the Borrower to recover from customers substantially all of
the amount by which the cost of gas purchases exceeds the amount
currently billed to customers for the delivery of such gas (sometimes
referred to as PGA clauses).
9. NEGATIVE COVENANTS
So long as the Borrower may borrow hereunder and until payment in full of
the Notes, except with the written consent of the Banks:
9.1 Capital Requirements. The Borrower will not:
(a) permit its Consolidated Net Worth at the end of any fiscal
quarter to be less than the sum of (i) $698,603,000; (ii) 40% of
Consolidated Net Income (if positive) for the period commencing
on January 1, 2000 and ending on the date of determination, and
treated as a single accounting period; (iii) the difference
between (A) 100% of the net proceeds of any issuance of capital
or preferred stock by the Borrower or any consolidated
Subsidiary received by the Borrower or such consolidated
Subsidiary at any time after December 31, 1999; and (B) the
aggregate amount of all redemption or repurchase payments
hereafter made, if any, by the Borrower and any such
consolidated Subsidiary in connection with the repurchase by the
Borrower or any such consolidated Subsidiary of any of their
respective capital or preferred stock; and (iv) without
duplication, the difference between (A) 100% of the net proceeds
heretofore and hereafter received by the Borrower and any
consolidated Subsidiary in respect of the issuance by the
Borrower or such consolidated Subsidiary of the Structured
Securities, and (B) the aggregate amount of all redemption
payments hereafter made, if any, by the Borrower and any such
consolidated Subsidiary in connection with the redemption of any
of the Structured Securities; or
(b) permit the ratio of its Consolidated Total Indebtedness to its
Consolidated Total Capitalization to be greater than 0.70 to
1.00 at the end of any fiscal quarter; or
(c) acquire, or permit any Subsidiary to acquire, any assets other
than (i) investments permitted under Section 9.4, or (ii)
Qualifying Assets; or
(d) permit the ratio of EBDIT to Cash Interest Expense for the four
fiscal quarters most recently ended (considered as a single
accounting period) at any time to be less than 2.00 to 1.00 at
all times.
9.2 Mortgages, Liens, Etc. The Borrower will not, and will not permit any
Subsidiary to, create or permit to exist any Lien (including the
charge upon assets purchased under a conditional sales agreement,
purchase money mortgage, security agreement or other title retention
agreement) upon any of its respective assets, whether now owned or
hereafter acquired, or assign or otherwise convey any right to
receive income, except:
(a) Liens for taxes not yet due or that are being contested in good
faith by appropriate proceedings;
(b) other Liens incidental to the conduct of its business or the
ownership of its assets that were not incurred in connection
with the borrowing of money or the obtaining of advances or
credit, and that do not in the aggregate materially detract from
the value of such assets or materially impair the use thereof in
the operation of such business;
(c) Liens on assets of a Subsidiary to secure obligations of such
Subsidiary to the Borrower or another Subsidiary; and
<PAGE>
(d) Liens on property existing at the time of acquisition thereof by
the Borrower or any Subsidiary, including without limitation,
any property acquired by the Borrower in consummating and
finalizing any of the Pending Acquisitions, or purchase money
Liens placed on an item of real or personal property purchased
by the Borrower or any Subsidiary to secure a portion of the
purchase price of such property, provided that no such Lien may
encumber or cover any other property of the Borrower or any
Subsidiary.
9.3 Debt. The Borrower will not, and will not permit any Subsidiary to,
incur or permit to exist any Debt, except:
(a) Debt evidenced by the Notes or outstanding under either of the
Revolving Credit Facilities not in default;
(b) Debt of any Subsidiary to the Borrower or any other Subsidiary;
(c) Debt existing as of March 31, 2000 as reflected on financial
statements delivered under Section 6.2(b) and refinancings
thereof other than Debt that has been refinanced by the proceeds
of either of the Revolving Credit Facilities;
(d) endorsements in the ordinary course of business of negotiable
instruments in the course of collection;
(e) Debt of the Borrower or any Subsidiary representing the portion
of the purchase price of property acquired by the Borrower or
such Subsidiary that is secured by Liens permitted by the
provisions of Section 9.2(d); provided, however, that at no time
may the aggregate principal amount of such Debt outstanding
exceed thirty percent (30%) of the Consolidated Net Worth of the
Borrower and its Subsidiaries as of the applicable determination
date;
(f) Debt evidenced by Senior Notes; and
(g) additional Debt of the Borrower and Structured Securities of the
Borrower and the Southern Union Trusts provided that after
giving effect to the issuance thereof, there shall exist no
Default or Event of Default; and: (i) the ratio of Consolidated
Total Indebtedness to Consolidated Total Capitalization shall be
no greater than 0.70 to 1.00; (ii) the ratio of EBDIT for the
four fiscal quarters most recently ended to pro forma Cash
Interest Expense for the following four fiscal quarters shall be
no less than 2.00 to 1.0 at all times; provided, however, that
if the additional Debt for which the determinations required to
be made by this subparagraph (g) will be used to finance in
whole or in part the consideration to be paid by the Borrower
for the acquisition of any entity otherwise permitted under the
terms of this Agreement, the determination of EBDIT for purposes
of this ratio shall include not only the EBDIT of the Borrower
and its Subsidiaries for the four fiscal quarters most recently
ended, but shall also include the EBDIT of such entity to be
acquired for such four fiscal quarters most recently ended; and
(iii) (A) such Debt and Structured Securities shall have a final
maturity or mandatory redemption date, as the case may be, no
earlier than the Maturity Date (as the same may be extended
pursuant to Section 2.4) and shall mature or be subject to
mandatory redemption or mandatory defeasance no earlier than the
Maturity Date (as so extended) and shall be subject to no
mandatory redemption or "put" to the Borrower or any Southern
Union Trust exercisable, or sinking fund or other similar
mandatory principal payment provisions that require payments to
be made toward principal, prior to such Maturity Date (as so
extended); or (B) (x) such additional Debt shall have a final
maturity date prior to the Maturity Date, (y) such additional
Debt shall not exceed Eighty Million Dollars ($80,000,000.00) in
the aggregate plus Twenty Million Dollars ($20,000,000.00) of
reimbursement obligations incurred in connection with
Non-Revolving Credit Facility Letters of Credit issued by a Bank
or Banks or by any other financial institution; provided,
however, that for purposes of determining the aggregate amount
of such additional Debt for purposes of this subclause (y), the
$30,000,000 of 8.375% mortgage notes of PG Energy maturing
December 1, 2002 shall not be included, and (z) such additional
Debt shall be borrowed from a Bank or Banks as a loan or loans
arising independent of this Agreement or either of the Revolving
Credit Facilities or shall be borrowed from a financial
institution that is not a Bank under this Agreement or either of
the Revolving Credit Facilities.
<PAGE>
(h) existing short-term Debt of any entity specified in the
definition of "Pending Acquisitions" that is assumed by the
Borrower in connection with the consummation of any of the
Pending Acquisitions, so long as (i) the aggregate principal
amount of such Debt assumed for all of the Pending Acquisitions
does not exceed $100,000,000.00 and (ii) none of such Debt
remains outstanding for more than 180 days after the
consummation of the applicable merger, unless all or a portion
of such Debt is refinanced with Debt otherwise permitted by
other provisions of this Section 9.3.
9.4 Loans, Advances and Investments. The Borrower will not, and will not
permit any Subsidiary to, make or have outstanding any loan or
advance to, or own or acquire any stock or securities of or equity
interest or other Investment in, any Person, except (without
duplication):
(a) stock of (i) the Subsidiaries named in Section 6.1 and any other
Subsidiary to be acquired in accordance with the terms of any of
the Pending Acquisitions; (ii) other entities that are acquired
by the Borrower or any Subsidiary but that are promptly merged
with and into the Borrower, including without limitation, the
stock of each entity merging with the Borrower under any of the
Pending Acquisitions; and (iii) the same Qualifying Entities as
the Qualifying Entities under subparagraph (ii) of the
definition of "Qualifying Assets," provided that at any one time
the aggregate purchase price paid for such stock in such
Qualifying Entities, including the aggregate amount of Debt
assumed or deemed incurred by Borrower in connection with the
purchase of such stock, is not more than ten percent (10%) of
the Consolidated Net Worth of the Borrower and its Subsidiaries
as of the applicable determination date;
(b) loans or advances to a Subsidiary;
(c) Securities maturing no more than 180 days after Borrower's
purchase that are either:
(i) readily marketable securities issued by the United States or
its agencies or instrumentalities; or
(ii)commercial paper rated "Prime 2" by Moody's Investors
Service, Inc. ("Moody's") or A-2 by Standard and Poor's
Ratings Group ("S&P"); or
(iii) certificates of deposit or repurchase contracts on
customary terms with financial institutions in which
deposits are insured by any agency or instrumentality of the
United States; or
(iv)readily marketable securities received in settlement of
liabilities created in the ordinary course of business; or
(v) obligations of states, agencies, counties, cities and other
political subdivisions of any state rated at lest MIG2,
VMIG2 or Aa by Moody's or AA by S&P; or
(vi)loan participations in credits in which the borrower's debt
is rated at least Aa or Prime 2 by Moody's or AA or A-2 by
S&P; or
(vii) money market mutual funds that are regulated by the
Securities and Exchange Commission, have a dollar-weighted
average stated maturity of 90 days or fewer on their
investments and include in their investment objectives the
maintenance of a stable net asset value of $1 for each
share.
(d) other equity interests owned by a Subsidiary on the date of this
Agreement and such additional equity interests to the extent
(but only to the extent) that such Subsidiary is legally
obligated to acquire those interests on the date of this
Agreement, in each case as disclosed to the Banks in writing;
(e) loans or advances by the Borrower to customers in connection
with and pursuant to marketing and merchandising products that
the Borrower reasonably expects to increase sales of the
Borrower or Subsidiaries, provided that: (i) such loans must be
either less than $2,000,000.00 to any one customer (or group of
affiliated customers, shown on the Borrower's records to be
Affiliates) or must be disclosed on Schedule 8.2 hereof; and
(ii) all such loans must not exceed $24,000,000.00 in the
aggregate outstanding at any time;
<PAGE>
(f) travel and expense advances in the ordinary course of business
to officers and employees;
(g) stock or securities of or equity interests in, any Person
provided that, after giving effect to the acquisition and
ownership thereof, the Borrower is in compliance with the
provisions of Section 9.1(c) of this Agreement; and
(h) loans, advances or other Investments by the Borrower or any
Subsidiary not otherwise permitted under the other provisions of
this Section 9.4, so long as the sum of the outstanding balance
of all of such loans and advances and the purchase price paid
for all of such other Investments does not exceed in the
aggregate seven percent (7%) of the Consolidated Net Worth of
the Borrower and its Subsidiaries as of the applicable
determination date.
9.5 Stock and Debt of Subsidiaries. The Borrower will not, and will not
permit any Subsidiary to, sell or otherwise dispose of any shares of
stock or Debt of any Subsidiary, or permit any Subsidiary to issue or
dispose of its stock (other than directors' qualifying shares),
except to the Borrower or another Subsidiary, and except that
Southern Union Trusts may issue preferred beneficial interests in
public offerings of Borrower's Structured Securities.
9.6 Merger, Consolidation, Etc. The Borrower will not, and will not
permit any Subsidiary to, merge or consolidate with any other Person
or sell, lease, transfer or otherwise dispose of (whether in one
transaction or a series of transactions) all or a substantial part of
its assets or acquire (whether in one transaction or a series of
transactions) all or a substantial part of the assets of any Person,
except that:
(a) any Subsidiary may merge or consolidate with the Borrower
(provided that the Borrower shall be the continuing or surviving
corporation) or with any one or more Subsidiaries;
(b) any Subsidiary may sell, lease, transfer or otherwise
dispose of any of its assets to the Borrower or another
Subsidiary;
(c) subject to Section 9.14, Lavaca Realty Company may dispose of
all or a substantial part of its assets to any Person, whether
in one transaction or a series of transactions, for a price or
prices that do not result in a Material Adverse Effect;
(d) the Borrower may acquire the assets of any Person, provided
that, after giving effect to such acquisition, the Borrower is
in compliance with the provisions of Sections 9.1(c);
(e) the Borrower or any Subsidiary may sell, lease, assign or
otherwise dispose of assets as otherwise permitted under
Section 9.8; and
(f) the Borrower may merge with the entities described in and as
contemplated under the definition of "Pending Acquisitions."
9.7 Supply and Purchase Contracts. The Borrower will not, and will not
permit any Subsidiary to, enter into or be a party to any contract
for the purchase of materials, supplies or other property if such
contract requires that payment for such materials, supplies or other
property shall be made regardless of whether or not delivery is ever
made or tendered of such materials, supplies and other property,
except in those circumstances and involving those supply or purchase
contracts that the Borrower reasonably considers to be necessary or
helpful in its operations in the ordinary course of business and that
the Borrower reasonably considers not to be unnecessarily burdensome
on the Borrower or its Subsidiaries.
<PAGE>
9.8 Sale or Other Disposition of Assets. The Borrower will not, and will
not permit any Subsidiary to, except as permitted under this Section
9.8, sell, assign, lease, or otherwise dispose of (whether in one
transaction or in a series of transactions) all or any part of its
Property (whether now owned or hereafter acquired); provided,
however, that (i) the Borrower or any Subsidiary may in the ordinary
course of business dispose of (a) Property consisting of Inventory;
and (b) Property consisting of goods or equipment that are, in the
opinion of the Borrower or any Subsidiary, obsolete or unproductive,
but if in the good faith judgment of the Borrower or any Subsidiary
such disposition without replacement thereof would have a Material
Adverse Effect, such goods and equipment shall be replaced, or their
utility and function substituted, by new or existing goods or
equipment; (ii) Lavaca Realty Company may dispose of its Property on
the terms set forth in Section 9.6(c); (iii) the Borrower may
transfer or dispose of any of its Significant Property (in any
transaction or series of transactions) to any Subsidiary or
Subsidiaries only if such Property so transferred or disposed of
after the Closing Date has an aggregate value as of the date of such
transfer or disposition (determined after depreciation and in
accordance with GAAP) of not more than ten percent (10%) of the
aggregate value of all of the Borrower's and its Subsidiaries' real
property and tangible personal property other than Inventory
considered on a consolidated basis and determined after depreciation
and in accordance with GAAP, as of March 31, 2000; provided, however,
that notwithstanding the foregoing limitation on the transfer of
assets by the Borrower to any Subsidiary, the Borrower may at any
time after the Closing Date transfer all or any portion of the stock
or other equity securities owned by the Borrower in Capstone Turbine
Corporation to a wholly-owned Subsidiary hereafter created by the
Borrower for the purpose of owning and holding such stock and other
equity securities; (iv) the Borrower and Lavaca Realty Company may
dispose of their real property in one or more sale/leaseback
transactions, provided that any Debt incurred in connection with such
transaction does not create a Default as defined herein; (v) a
Southern Union Trust may distribute the Borrower's subordinated debt
securities constituting a portion of the Structured Securities, on
the terms and under the conditions set out in the registration
statement therefor filed with the Securities and Exchange Commission
on March 25, 1995 or any similar registration statement hereafter
filed with the Securities and Exchange Commission in connection with
any other Structured Securities issued in connection with the Pending
Acquisitions; (vi) the Borrower or any Subsidiary may dispose of real
property or tangible personal property other than Inventory (in
consideration of such amount as in the good faith judgment of the
Borrower or such Subsidiary represents a fair consideration
therefor), provided that the aggregate value as of the date of
disposition of such property disposed of (determined after
depreciation and in accordance with GAAP) after the Closing Date does
not exceed ten percent (10%) of the aggregate value of all of the
Borrower's and its Subsidiaries' real property and tangible personal
property other than Inventory considered on a consolidated basis and
determined after depreciation and in accordance with GAAP, as of
March 31, 2000; (vii) the Borrower may dispose of Qualifying Assets
of the type described in clause (ii) of the definition of Qualifying
Assets, provided that the Borrower make a payment on the Loan in an
amount equal to the lesser of (a) the net sales proceeds from such
disposition, and (b) the amount of Loan proceeds used to acquire such
clause (ii) Qualifying Assets; and (viii) the Borrower may dispose of
other Investments of the type acquired under the terms of Section
9.4(h), provided that the Borrower make a payment on the Loan in an
amount equal to the lesser of (a) the net sales proceeds from such
disposition, and (b) the amount of Loan proceeds used to acquire such
other Investments.
9.9 Discount or Sale of Receivables. The Borrower will not, and will not
permit any Subsidiary, other than Southern Union Total Energy
Services, Inc., to discount or sell with recourse, or sell for less
than the face value thereof (including any accrued interest) any of
its notes receivable, receivables under leases or other accounts
receivable.
9.10 Change in Accounting Method. The Borrower will not, and will not
permit any Subsidiary to, make any change in the method of computing
depreciation for either tax or book purposes or any other material
change in accounting method representing any departure from GAAP
without the Majority Banks' prior written approval.
9.11 Restricted Payment. The Borrower will not pay or declare any
Restricted Payment unless immediately prior to such payment and after
giving effect to such payment, the Borrower could incur at least $1
of additional Debt without violating the provisions of Section 9.3(g)
and after giving effect thereto no Default or Event of Default exists
hereunder.
9.12 Securities Credit Regulations. Neither the Borrower nor any
Subsidiary will take or permit any action which might cause the Loans
or the Facility Letter of Credit Obligations or this Agreement to
violate Regulation G, Regulation T, Regulation U, Regulation X or any
other regulation of the Board of Governors of the Federal Reserve
System or a violation of the Securities Exchange Act of 1934, in each
case as now or hereafter in effect.
<PAGE>
9.13 Nature of Business; Management. The Borrower will not, and will not
permit any Subsidiary to: (a) change its principal line of business;
or (b) enter into any business not within the scope of Section 6.15
and the definition of Qualifying Assets; or (c) permit any material
overall change in the management of the Borrower.
9.14 Transactions with Related Parties. The Borrower will not, and will
not permit any Subsidiary to, enter into any transaction or agreement
with any officer, director or holder of ten percent (10%) or more of
any class of the outstanding capital stock of the Borrower or any
Subsidiary (or any Affiliate of any such Person) unless the same is
upon terms substantially similar to those obtainable from wholly
unrelated sources.
9.15 Hazardous Materials. The Borrower will not, and will not permit any
Subsidiary to (a) cause or permit any Hazardous Materials to be
placed, held, used, located, or disposed of on, under or at any of
such Person's property or any part thereof by any Person in a manner
which could reasonably be expected to have a Material Adverse Effect;
(b) cause or permit any part of any of such Person's property to be
used as a manufacturing, storage, treatment or disposal site for
Hazardous Materials, where such action could reasonably be expected
to have a Material Adverse Effect; or (c) cause or suffer any liens
to be recorded against any of such Person's property as a consequence
of, or in any way related to, the presence, remediation, or disposal
of Hazardous Materials in or about any of such Person's property,
including any so-called state, federal or local "superfund" lien
relating to such matters, where such recordation could reasonably be
expected to have a Material Adverse Effect.
9.16 Limitations on Payments on Subordinated Debt. The Borrower will not,
and will not permit any Subsidiary to, make any payment in respect of
interest on, principal of, or otherwise relating to, the borrower's
subordinated debt securities issued in connection with the Structured
Securities if, after giving effect to such payment, a Default or
Event of Default would exist.
10. EVENTS OF DEFAULT; REMEDIES
If any of the following events shall occur, then the Agent shall at the
request, or may with the consent, of the Majority Banks, (a) by notice to
the Borrower, declare the Commitment of each Bank and the several
obligation of each Bank to make Loans hereunder to be terminated, whereupon
the same shall forthwith terminate, and (b) declare the Notes and all
interest accrued and unpaid thereon, and all other amounts payable under
the Notes, this Agreement and the other Loan Documents, to be forthwith due
and payable, whereupon the Notes, all such interest and all such other
amounts, shall become and be forthwith due and payable without presentment,
demand, protest, or further notice of any kind (including, without
limitation, notice of default, notice of intent to accelerate and notice of
acceleration), all of which are hereby expressly waived by the Borrower;
provided, however, that with respect to any Event of Default described in
Sections 10.7 or 10.8 hereof, (i) the Commitment of each Bank and the
obligation of the Banks to make Loans shall automatically be terminated and
(ii) the entire unpaid principal amount of the Notes, all interest accrued
and unpaid thereon, and all such other amounts payable under the Notes,
this Agreement and the other Loan Documents, shall automatically become
immediately due and payable, without presentment, demand, protest, or any
notice of any kind (including, without limitation, notice of default,
notice of intent to accelerate and notice of acceleration), all of which
are hereby expressly waived by the Borrower:
10.1 Failure to Pay Principal or Interest. The Borrower does not pay,
repay or prepay any principal of or interest on any Note when due; or
10.2 Failure to Pay Commitment Fee or Other Amounts. The Borrower does not
pay any commitment fee or any other obligation or amount payable
under this Agreement or the Notes within two (2) Business Days after
the same shall have become due; or
10.3 Failure to Pay Other Debt. The Borrower or any Subsidiary fails to
pay principal or interest aggregating more than $2,000,000.00 on any
other Debt when due and any related grace period has expired, or the
holder of any of such other Debt declares such Debt due prior to its
stated maturity because of the Borrower's or any Subsidiary's default
thereunder and the expiration of any related grace period; or
<PAGE>
10.4 Misrepresentation or Breach of Warranty. Any representation or
warranty made by the Borrower herein or otherwise furnished to the
Agent or any Bank in connection with this Agreement or any other Loan
Document shall be incorrect, false or misleading in any material
respect when made; or
10.5 Violation of Negative Covenants. The Borrower violates any covenant,
agreement or condition contained in Sections 9.2, 9.3, 9.5, 9.6,
9.9, 9.10, 9.11, or 9.15; or
10.6 Violation of Other Covenants, Etc. The Borrower violates any other
covenant, agreement or condition contained herein (other than the
covenants, agreements and conditions set forth or described in
Sections 10.1, 10.2, 10.3, 10.4, and 10.5 above) or in any other Loan
Document and such violation shall not have been remedied within (30)
days after written notice has been received by the Borrower from the
Agent or the holder of any Note; or
10.7 Bankruptcy and Other Matters. The Borrower or any Subsidiary (a)
makes an assignment for the benefit of creditors; or (b) admits in
writing its inability to pay its debts generally as they become due;
or (c) generally fails to pay its debts as they become due; or (d)
files a petition or answer seeking for itself, or consenting to or
acquiescing in, any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any
applicable Debtor Law (including, without limitation, the Federal
Bankruptcy Code); or (i) there is appointed a receiver, custodian,
liquidator, fiscal agent, or trustee of the Borrower or any
Subsidiary or of the whole or any substantial part of their
respective assets; or (ii) any court enters an order, judgment or
decree approving a petition filed against the Borrower or any
Subsidiary seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any
Debtor Law and either such order, decree or judgment so filed against
it is not dismissed or stayed (unless and until such stay is no
longer in effect) within thirty (30) days of entry thereof or an
order for relief is entered pursuant to any such law; or
10.8 Dissolution. Any order is entered in any proceeding against the
Borrower or any Subsidiary decreeing the dissolution, liquidation,
winding-up or split-up of the Borrower or such Subsidiary, and such
order remains in effect for thirty (30) days; or
10.9 Undischarged Judgment. Final Judgment or judgments in the aggregate,
that might be or give rise to Liens on any property of the Borrower
or any Subsidiary, for the payment of money in excess of
$1,000,000.00 shall be rendered against the Borrower or any
Subsidiary and the same shall remain undischarged for a period of
thirty (30) days during which execution shall not be effectively
stayed; or
10.10 Environmental Matters. The occurrence of any of the following events
that could result in liability to the Borrower or any Subsidiary
under any Environmental Law or the creation of a Lien on any property
of the Borrower or any Subsidiary in favor of any governmental
authority or any other Person for any liability under any
Environmental Law or for damages arising from costs incurred by such
Person in response to a Release or threatened Release of Hazardous
Materials into the environment if any such asserted liability or Lien
exceeds $10,000,000.00 and if any such lien would cover any property
of the Borrower or any Subsidiary which property is or would
reasonably be considered to be integral to the operations of the
Borrower or any Subsidiary in the ordinary course of business:
(a) the Release of Hazardous Materials at, upon, under or within
the property owned or leased by the Borrower or any
Subsidiary or any contiguous property;
(b) the receipt by the Borrower or any Subsidiary of any summons,
claim, complaint, judgment, order or similar notice that it is
not in compliance with or that any governmental authority is
investigating its compliance with any Environmental Law;
(c) the receipt by the Borrower or any Subsidiary of any notice or
claim to the effect that it is or may be liable for the Release
or threatened Release of Hazardous Materials into the
environment; or
(d) any governmental authority incurs costs or expenses in response
to the Release of any Hazardous Material which affects in any
way the properties of the Borrower or any Subsidiary; or
<PAGE>
10.11 Default under Revolving Credit Facilities. An Event of Default (as
defined under either of the credit agreements evidencing the
Revolving Credit Facilities) shall occur under either of the
Revolving Credit Facilities.
10.12 Other Remedies. In addition to and cumulative of any rights or
remedies expressly provided for in this Section 10, if any one or
more Events of Default shall have occurred, the Agent shall at the
request, and may with the consent, of the Majority Banks proceed to
protect and enforce the rights of the Banks hereunder by any
appropriate proceedings. The Agent shall at the request, and may with
the consent, of the Majority Banks also proceed either by the
specific performance of any covenant or agreement contained in this
Agreement or by enforcing the payment of the Notes or by enforcing
any other legal or equitable right provided under this Agreement or
the Notes or otherwise existing under any law in favor of the holder
of any of the Notes.
10.13 Remedies Cumulative. No remedy, right or power conferred upon the
Banks is intended to be exclusive of any other remedy, right or power
given hereunder or now or hereafter existing at law, in equity, or
otherwise, and all such remedies, rights and powers shall be
cumulative.
11. THE AGENT
11.1 Authorization and Action. Each Bank hereby appoints Chase as its
Agent under and irrevocably authorizes the Agent (subject to Sections
11.1 and 11.7) to take such action as the Agent on its behalf and to
exercise such powers under this Agreement and the Notes as are
delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto. Without limitation of
the foregoing, each Bank expressly authorizes the Agent to execute,
deliver, and perform its obligations under this Agreement, and to
exercise all rights, powers, and remedies that the Agent may have
hereunder. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or collection
of the Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act, or to
refrain from acting (and shall be fully protected in so acting or
refraining from acting), upon the instructions of the Majority Banks,
and such instructions shall be binding upon all the Banks and all
holders of any Note; provided, however, that the Agent shall not be
required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or applicable law.
The Agent agrees to give to each Bank prompt notice of each notice
given to it by the Borrower pursuant to the terms of this Agreement.
11.2 Agent's Reliance, Etc. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable to any Bank for any
action taken or omitted to be taken by it or them under or in
connection with this Agreement, the Notes and the other Loan
Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing,
the Agent: (a) may treat the original or any successor holder of any
Note as the holder thereof until the Agent receives notice from the
Bank which is the payee of such Note concerning the assignment of
such Note; (b) may employ and consult with legal counsel (including
counsel for the Borrower), independent public accountants, and other
experts selected by it and shall not be liable to any Bank for any
action taken, or omitted to be taken, in good faith by it or them in
accordance with the advice of such counsel, accountants, or experts
received in such consultations and shall not be liable for any
negligence or misconduct of any such counsel, accountants, or other
experts; (c) makes no warranty or representation to any Bank and
shall not be responsible to any Bank for any opinions,
certifications, statements, warranties, or representations made in or
in connection with this Agreement; (d) shall not have any duty to any
Bank to ascertain or to inquire as to the performance or observance
of any of the terms, covenants, or conditions of this Agreement or
any other instrument or document furnished pursuant thereto or to
satisfy itself that all conditions to and requirements for any Loan
have been met or that the Borrower is entitled to any Loan or to
inspect the property (including the books and records) of the
Borrower or any Subsidiary; (e) shall not be responsible to any Bank
for the due execution, legality, validity, enforceability,
genuineness, sufficiency, or value of this Agreement or any other
instrument or document furnished pursuant thereto; and (f) shall
incur no liability under or in respect of this Agreement by acing
upon any notice, consent, certificate, or other instrument or writing
(which may be by telegram, cable, telex, or otherwise) believed by it
to be genuine and signed or sent by the proper party or parties.
<PAGE>
11.3 Defaults. The Agent shall not be deemed to have knowledge of the
occurrence of a Default (other than the nonpayment of principal of or
interest hereunder or of any fees) unless the Agent has received
notice from a Bank or the Borrower specifying such Default and
stating that such notice is a Notice of Default. In the event that
the Agent receives such a notice of the occurrence of a Default, the
Agent shall give prompt notice thereof to the Banks (and shall give
each Bank prompt notice of each such nonpayment). The Agent shall
(subject to Section 11.7) take such action with respect to such
Default; provided that, unless and until the Agent shall have
received the directions referred to in Sections 11.1 or 11.7, the
Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it
shall deem advisable and in the best interest of the Banks.
11.4 Chase and Affiliates. With respect to its Commitment, any Loan made
by it, and the Note issued to it, Chase shall have the same rights
and powers under this Agreement as any other Bank and may exercise
the same as though it were not the Agent; and the term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include Chase in
its individual capacity. Chase and its respective Affiliates may
accept deposits from, lend money to, act as trustee under indentures
of, and generally engage in any kind of business with, the Borrower,
any of its respective Affiliates and any Person who may do business
with or own securities of the Borrower or any such Affiliate, all as
if Chase were not the Agent and without any duty to account therefor
to the Banks.
11.5 Non-Reliance on Agent and Other Banks. Each Bank agrees that it has,
independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and each
Subsidiary and its decision to enter into the transactions
contemplated by this Agreement and that it will, independently and
without reliance upon the Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not
taking action under this Agreement. The Agent shall not be required
to keep itself informed as to the performance or observance by the
Borrower of this Agreement or to inspect the properties or books of
the Borrower or any Subsidiary. Except for notices, reports, and
other documents and information expressly required to be furnished to
the Banks by the Agent hereunder, the Agent shall not have any duty
or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition, or business
of the Borrower or any Subsidiary (or any of their Affiliates) which
may come into the possession of the Agent or any of its Affiliates.
11.6 Indemnification. Notwithstanding anything to the contrary herein
contained, the Agent shall be fully justified in failing or refusing
to take any action hereunder unless it shall first be indemnified to
its satisfaction by the Banks against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, and disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of its taking or continuing to
take any action. Each Bank agrees to indemnify the Agent (to the
extent not reimbursed by the Borrower), according to such Bank's
Commitment, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses, and disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Agent in any
way relating to or arising out of this Agreement or the Notes or any
action taken or omitted by the Agent under this Agreement or the
Notes; provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements resulting from
the gross negligence or willful misconduct of the person being
indemnified; and provided further that it is the intention of each
Bank to indemnify the Agent against the consequences of the Agent's
own negligence, whether such negligence be sole, joint, concurrent,
active or passive. Without limitation of the foregoing, each Bank
agrees to reimburse the Agent promptly upon demand for its Pro Rata
Percentage of any out-of-pocket expenses (including attorneys' fees)
incurred by the Agent in connection with the preparation,
administration, or enforcement of, or legal advice in respect of
rights or responsibilities under, this Agreement and the Notes, to
the extent that the Agent is not reimbursed for such expenses by the
Borrower.
<PAGE>
11.7 Successor Agent. The Agent may resign at any time as Agent under this
Agreement by giving written notice thereof to the Banks and the
Borrower and may be removed at any time with or without cause by the
Majority Banks. Upon any such resignation or removal, the Majority
Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Majority Banks or
shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation or the Majority
Banks' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and
surplus of at least $500,000,000.00. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Section 11 shall
inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement.
11.8 Agent's Reliance. The Borrower shall notify the Agent in writing of
the names of its officers and employees authorized to request a Loan
on behalf of the Borrower and shall provide the Agent with a specimen
signature of each such officer or employee. The Agent shall be
entitled to rely conclusively on such officer's or employee's
authority to request a Loan on behalf of the Borrower until the Agent
receives written notice from the Borrower to the contrary. The Agent
shall have no duty to verify the authenticity of the signature
appearing on any Notice of Borrowing, and, with respect to any oral
request for a Loan, the Agent shall have no duty to verify the
identity of any Person representing himself as one of the officers or
employees authorized to make such request on behalf of the Borrower.
Neither the Agent nor any Bank shall incur any liability to the
Borrower in acting upon any telephonic notice referred to above which
the Agent or such Bank believes in good faith to have been given by a
duly authorized officer or other Person authorized to borrow on
behalf of the Borrower or for otherwise acting in good faith.
12. MISCELLANEOUS
12.1 Representation by the Banks. Each Bank represents that it is the
intention of such Bank, as of the date of its acquisition of its
Note, to acquire the Note for its account or for the account of its
Affiliates, and not with a view to the distribution or sale thereof,
and, subject to any applicable laws, the disposition of such Bank's
property shall at all times be within its control. The Notes have not
been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be transferred, sold or otherwise
disposed of except (a) in a registered Offering under the Securities
Act; (b) pursuant to an exemption from the registration provisions of
the Securities Act; or (c) if the Securities Act shall not apply to
the Notes or the transactions contemplated hereunder as commercial
lending transactions.
<PAGE>
12.2 Amendments, Waivers, Etc. No amendment or waiver of any provision of
any Loan Document, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Borrower and the Majority Banks, and
then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided,
however, that no amendment, waiver, or consent shall, unless in
writing and signed by each Bank, do any of the following: (a) waive
any of the conditions specified in Section 7; (b) increase the
Commitment of any Bank or alter the term thereof, or subject any Bank
to any additional or extended obligations; (c) change the principal
of, or rate of interest on, any Note, or any fees or other amounts
payable hereunder; (d) postpone any date fixed for any payment of
principal of, or interest on, any Note, or any fees (including,
without limitation, any fee) or other amounts payable hereunder; (e)
change the percentage of the Commitments or of the aggregate unpaid
principal amount of any Note, or the number of Banks which shall be
required for Banks, or any of them, to take any action hereunder; or
(f) amend this Section 12.2; and provided, further, that no
amendment, waiver, or consent shall, unless in writing and signed by
the Agent in addition to each Bank, affect the rights or duties of
the Agent under any Loan Document. No failure or delay on the part of
any Bank or the Agent in exercising any power or right hereunder
shall operate as a waiver thereof nor shall any single or partial
exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude
any other or further exercise thereof or the exercise of any other
right or power. No course of dealing between the Borrower and any
Bank or the Agent shall operate as a waiver of any right of any Bank
or the Agent. No modification or waiver of any provision of this
Agreement or the Note nor consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in
writing, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice
to or demand on the Borrower in any case shall entitle the Borrower
to any other or further notice or demand in similar or other
circumstances.
12.3 Reimbursement of Expenses. Other than expenses provided in Section
8.7, any provision hereof to the contrary notwithstanding, and
whether or not the transactions contemplated by this Agreement shall
be consummated, the Borrower agrees to reimburse (a) the Agent for
its reasonable out-of-pocket expenses, including the reasonable fees
and expenses of counsel to the Agent, in connection with such
transactions, or any of them, or otherwise in connection with this
Agreement, including its negotiation, preparation, execution,
administration and modification, (b) the Agent and each Bank for all
reasonable fees incurred by the Agent or any Bank in connection with
the enforcement of this Agreement after the occurrence of any Event
of Default which is then continuing, including the reasonable fees
and expenses of counsel to the Agent and each Bank related thereto,
(c) the Agent for costs and expenses of the Agent for environmental
consultants related to the transactions contemplated and governed by
this Agreement, and (d) the Agent and each Bank for costs and
expenses of the Agent and each Bank in connection with due diligence,
transportation, computer time and research and duplication. The
Borrower agrees to pay any and all stamp and other taxes which may be
payable or determined to be payable in connection with the execution
and delivery of this Agreement or the Notes, and to save any holder
of any Note harmless from any and all liabilities with respect to or
resulting from any delay or omission to pay any such taxes. The
obligations of the Borrower under this Section 12.3 shall survive the
termination of this Agreement and/or the payment of the Notes.
12.4 Notices. All notices and other communications provided for herein
shall be in writing (including telex, facsimile, or cable
communication) and shall be mailed, telecopied, telexed, cabled or
delivered addressed as follows:
(a) If to the Borrower,
to it at: Southern Union Company
504 Lavaca, Suite 800
Austin, Texas 78701
Attention: Mr. Ronald J. Endres
Fax: (512) 370-8253
with copies to: Susan Westbrook, Esq.
Ms. Cheryl Yager
Southern Union Company
504 Lavaca, Suite 800
Austin, Texas 78701
Fax: (512) 370-8253
(b) If to the Agent, to it at: The Chase Manhattan Bank
700 Lavaca, 2nd Floor
Austin, Texas 78701
Attention: Manager/Commercial Lending
Fax: (512) 479-2853
with a copy to: The Chase Manhattan Bank
Loan and Agency Services
One Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Mr. Muniram Appanna
Fax: (212) 552-2261
<PAGE>
and if to any Bank, at the address specified below its name on
the signature pages hereof, or as to the Borrower or the Agent,
to such other address as shall be designated by such party in a
written notice to the other party and, as to each other party,
at such other address as shall be designated by such party in a
written notice to the Borrower and the Agent. All such notices
and communications shall, when mailed, telecopied, telexed,
transmitted, or cabled, become effective when deposited in the
mail, confirmed by telex answer back, transmitted to the
telecopier, or delivered to the cable company, except that
notices and communications to the Agent under Sections 2.1(c) or
2.2 shall not be effective until actually received by the Agent.
12.5 Governing Law; Venue. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
AND THE UNITED STATES OF AMERICA; provided, however, that Chapter 346
of the Texas Finance Code, as amended, shall not apply to this
Agreement and the Notes issued hereunder. Travis County, Texas shall
be a proper place of venue to enforce payment or performance of this
Agreement and the other Loan Documents by the Borrower, unless the
Agent shall give its prior written consent to a different venue. The
Borrower hereby irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or
relating to any of the Loan Documents in the District Courts of
Travis County, Texas, or in the United States District Court for the
Western District of Texas, Austin Division, and hereby further
irrevocably waives any claims that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum. The Borrower hereby irrevocably agrees that,
provided that the Borrower can obtain personal jurisdiction over and
service of process upon the Agent or the applicable Bank, any legal
proceeding against the Agent or any Bank arising out of or in
connection with this Agreement or the other Loan Documents shall be
brought in the district courts of Travis County, Texas, or in the
United States District Court for the Western District of Texas,
Austin Division. Nothing contained in this Section or in any other
provision of any Loan Document (unless expressly provided otherwise)
shall be deemed or construed as an agreement by any Bank to be
subject to the jurisdiction of such courts.
12.6 Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants contained herein or made in
writing by the Borrower in connection herewith shall survive the
execution and delivery of this Agreement and the Notes, and will bind
and inure to the benefit of the respective successors and assigns of
the parties hereto, whether so expressed or not, provided that the
undertaking of the Banks to make the Loans to the Borrower shall not
inure to the benefit of any successor or assign of the Borrower. No
investigation at any time made by or on behalf of the Banks shall
diminish the Banks' rights to rely on any representations made herein
or in connection herewith. All statements contained in any
certificate or other written instrument delivered by the Borrower or
by any Person authorized by the Borrower under or pursuant to this
Agreement or in connection with the transactions contemplated hereby
shall constitute representations and warranties hereunder as of the
time made by the Borrower.
12.7 Counterparts. This Agreement may be executed in several counterparts,
and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an
original instrument and all such separate counterparts shall
constitute but one and the same instrument.
12.8 Separability. Should any clause, sentence, paragraph or section of
this Agreement be judicially declared to be invalid, unenforceable or
void, such decision shall not have the effect of invalidating or
voiding the remainder of this Agreement, and the parties hereto agree
that the part or parts of this Agreement so held to be invalid,
unenforceable or void will be deemed to have been stricken herefrom
and the remainder will have the same force and effectiveness as if
such part or parts had never been included herein. Each covenant
contained in this Agreement shall be construed (absent an express
contrary provision herein) as being independent of each other
covenant contained herein, and compliance with any one covenant shall
not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
12.9 Descriptive Headings. The section headings in this Agreement have
been inserted for convenience only and shall be given no substantive
meaning or significance whatsoever in construing the terms and
provisions of this Agreement.
<PAGE>
12.10 Accounting Terms. All accounting terms used herein which are not
expressly defined in the Agreement, or the respective meanings of
which are not otherwise qualified, shall have the respective meanings
given to them in accordance with GAAP.
12.11 Limitation of Liability. No claim may be made by the Borrower or any
other Person against the Agent or any Bank or the Affiliates,
directors, officers, employees, attorneys, or agents of the Agent or
any Bank for any special, indirect, consequential, or punitive
damages in respect to any claim for breach of contract arising out of
or related to the transactions contemplated by this Agreement, or any
act, omission, or event occurring in connection herewith and the
Borrower hereby waives, releases, and agrees not to sue upon any
claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
12.12 Set-Off. The Borrower hereby gives and confirms to each Bank a right
of set-off of all moneys, securities and other property of the
Borrower (whether special, general or limited) and the proceeds
thereof, now or hereafter delivered to remain with or in transit in
any manner to such Bank, its Affiliates, correspondents or agents
from or for the Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise or coming into possession of
such Bank, its Affiliates, correspondents or agents in any way, and
also, any balance of any deposit accounts and credits of the Borrower
with, and any and all claims of security for the payment of the Notes
and of all other liabilities and obligations now or hereafter owed by
the Borrower to such Bank, contracted with or acquired by such Bank,
whether such liabilities and obligations be joint, several, absolute,
contingent, secured, unsecured, matured or unmatured, and the
Borrower hereby authorizes each Bank, its Affiliates, correspondents
or agents at any time or times, without prior notice, to apply such
money, securities, other property, proceeds, balances, credits of
claims, or any part of the foregoing, to such liabilities in such
amounts as it may select, whether such liabilities be contingent,
unmatured or otherwise, and whether any collateral security therefor
is deemed adequate or not. The rights described herein shall be in
addition to any collateral security, if any, described in any
separate agreement executed by the Borrower.
12.13 Sale or Assignment
(a) Subject to the prior written consent of the Agent and the
Borrower, such consent not to be unreasonably withheld, each
Bank may assign to an Eligible Assignee all or a portion of its
rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments and the Note
held by it); provided, however, that: (i) each such assignment
shall be of a constant, and not a varying, percentage of all of
the assigning Banks rights and obligations under this Agreement;
(ii) the amount of the Commitments so assigned shall equal or
exceed $5,000,000.00; (iii) the Commitment of each Bank shall be
not less than $5,000,000.00 (subject only to reductions pursuant
to Sections 3.6 and 10 hereof); (iv) the parties to each such
assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register (as hereinafter
defined), an Assignment and Acceptance in the form of Exhibit C
attached hereto and made a part hereof (the "Assignment and
Acceptance"), together with any Note subject to such assignment
and a processing and recordation fee of $2,000.00; (v) any such
assignment from one Bank to another Bank shall not require the
consent of the Agent or the Borrower if such assignment does not
result in any Bank holding more than 60% of the aggregate
outstanding Commitments; and (vi) any such assignment shall not
require the consent of the Borrower if a Default or Event of
Default shall have occurred and is then continuing. Upon such
execution, delivery, acceptance, and recording, from and after
the effective date specified in each Assignment and Acceptance,
which effective date shall be the date on which such Assignment
and Acceptance is accepted by the Agent, (A) the Eligible
Assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and
obligations of a Bank under the Loan Documents, and (B) the Bank
assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released
from its obligations under the Loan Documents (and, in the case
of an Assignment and Acceptance covering all or the remaining
portion of an assigning Bank's rights and obligations under the
Loan Documents, such Bank shall cease to be a party thereto).
<PAGE>
(b) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the Eligible Assignee thereunder
confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment
and Acceptance, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any
statements, warranties, or representations made in or in
connection with any Loan Document or the execution, legality,
validity, enforceability, genuineness, sufficiency, or value of
any Loan Document or any other instrument or document furnished
pursuant thereto; (ii) such assigning Bank makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any
Subsidiary or the performance or observance by the Borrower of
any of its obligations under any Loan Document or any other
instrument or document furnished pursuant thereto; (iii) such
Eligible Assignee confirms that it has received a copy of the
Loan Documents, together with copies of the financial statements
referred to in Section 6.2 and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and
Acceptance; (iv) such Eligible Assignee, independently and
without reliance upon the Agent, such assigning Bank, or any
Bank and based on such documents and information as it shall
deem appropriate at the time, will continue to make its own
credit decisions in taking or not taking action under this
Agreement; (v) such Eligible Assignee appoints and authorizes
the Agent to take such action as agent on its behalf and to
exercise such powers under any Loan Document as are delegated to
the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; and (vi) such Eligible Assignee
agrees that it will perform in accordance with their terms all
of the obligations which by the terms of any Loan Document are
required to be performed by it as a Bank.
(c) The Agent shall maintain at its address referred to in Section
12.4 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names
and addresses of Banks and the Commitment of, and principal
amount of the Loans owing to, each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the
Borrower, the Agent, and Banks may treat each Person whose name
is recorded in the Register as Bank hereunder for all purposes
of the Loan Documents. The Register shall be available for
inspection by the Borrower or any Bank at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank, together with any Note subject to such
assignment, the Agent, if such Assignment and Acceptance has
been completed and is in substantially the form of Exhibit C,
shall (i) accept such Assignment and Acceptance; (ii) record the
information contained therein in the Register; and (iii) give
prompt notice thereof to the Borrower. Within three (3) Business
Days after its receipt of such notice, the Borrower at its own
expense, shall execute and deliver to the Agent in exchange for
each surrendered Note a new Note to the order of such Eligible
Assignee in an amount equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning
Bank has retained a Commitment hereunder, a new Note to the
order of the assigning Bank in an amount equal to the Commitment
retained by it hereunder. The new Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit C attached hereto and made a
part hereof. Upon receipt by the Agent of each such new Note
conforming to the requirements set forth in the preceding
sentences, the Agent shall return to the Borrower each such
surrendered Note marked to show that each such surrendered Note
has been replaced, renewed, and extended by such new Note.
<PAGE>
(e) Each Bank may sell participations to one or more banks or other
entities in or to all or a portion of its rights and/or
obligations under this Agreement (including, without limitation,
all or a portion of its Commitment and the Note held by it);
provided, however, that (i) each Bank's obligations under this
Agreement (including, without limitation, its Commitment to the
Borrower hereunder) shall remain unchanged; (ii) such Bank shall
remain solely responsible to the other parties hereto for the
performance of such obligations; (iii) except as provided below,
such Bank shall remain the holder of any such Note for all
purposes of this Agreement; and (iv) the participating banks or
other entities shall be entitled to the benefits of Sections 2.3
and 3.6 to recover costs, losses and expenses in the
circumstances, and to the extent provided in Section 2.3, as
though such participant were a Bank; provided, however, the
amounts to which a participant shall be entitled to obtain
pursuant to Sections 2.3 and 3.6 shall be determined by
reference to such participant's selling Bank and shall be
recoverable solely from such selling Bank and (v) the Borrower,
the Agent and the other Banks shall continue to deal solely and
directly with the selling Bank in connection with such Bank's
rights and obligations under this Agreement and the other Loan
Documents; provided, however, the selling Bank may grant a
participant rights with respect to amendments, modification or
waivers with respect to any fees payable hereunder to such Bank
(including the amount and the dates fixed for the payment of any
such fees) or the amount of principal or the rate of interest
payable on, the dates fixed for any payment of principal or
interest on, the Loans, or the release of any obligations of the
Borrower hereunder and under the other Loan Documents, or the
release of any security for any of the Obligations. Except with
respect to cost protections contained in Sections 2.3 and 3.6,
no participant shall be a third party beneficiary of this
Agreement and shall not be entitled to enforce any rights
provided to its selling Bank against the Company under this
Agreement.
(f) Notwithstanding anything herein to the contrary, each Bank may
pledge and assign all or any portion of its rights and interests
under the Loan Documents to any Federal Reserve Bank.
12.14 Non U.S. Banks. Prior to the date of the initial Borrowings
hereunder, and from time to time thereafter if requested by the
Borrower or the Agent, each Bank organized under the laws of a
jurisdiction outside the United States of America shall provide the
Agent and the Borrower with the forms prescribed by the Internal
Revenue Service of the United States of America certifying such Banks
exemption from United States withholding taxes with respect to all
payments to be made to such Bank hereunder or under such Bank's Note.
Unless the Borrower and the Agent have received forms or other
documents satisfactory to them indicating that payments hereunder or
under such Bank's Note are not subject to United States withholding
tax or are subject to such tax at a rate reduced by an applicable tax
treaty, the Borrower or the Agent shall withhold taxes from such
payments at the applicable statutory rate in the case of payments to
or for any Bank organized under the laws of a jurisdiction outside
the United States.
12.15 Interest. All agreements between the Borrower, the Agent or any Bank,
whether now existing or hereafter arising and whether written or
oral, are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of demand being made on any Note or
otherwise, shall the amount paid, or agreed to be paid, to the Agent
or any Bank for the use, forbearance, or detention of the money to be
loaned under this Agreement or otherwise or for the payment or
performance of any covenant or obligation contained herein or in any
document related hereto exceed the amount permissible at the Highest
Lawful Rate. If, as a result of any circumstances whatsoever,
fulfillment of any provision hereof or of any of such documents, at
the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by applicable usury
law, then, ipso facto, the obligation to be filled shall be reduced
to the limit of such validity, and if, from any such circumstance,
the Agent or any Bank shall ever receive interest or anything which
might be deemed interest under applicable law which would exceed the
amount permissible at the Highest Lawful Rate, such amount which
would be excessive interest shall be applied to the reduction of the
principal amount owing on account of the Notes or the amounts owing
on other obligations of the Borrower to the Agent or any Bank under
this Agreement or any document related hereto and not to the payment
of interest, or if such excessive interest exceeds the unpaid
principal balance of the Notes and the amounts owing on other
obligations of the Borrower to the Agent or any Bank under this
Agreement or any document related hereto, as the case may be, such
excess shall be refunded to the Borrower. All sums paid or agreed to
be paid to the Agent or any Bank for the use, forbearance, or
detention of the indebtedness of the Borrower to the Agent or any
Bank shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full term of such
indebtedness until payment in full of the principal thereof
(Including the period of any renewal or extension thereof) so that
the interest on account of such indebtedness shall not exceed the
Highest Lawful Rate. The terms and provisions of this Section 12.15
shall control and supersede every other provision of all agreements
between the Borrower and the Banks.
<PAGE>
12.16 Indemnification. THE BORROWER AGREES TO INDEMNIFY, DEFEND, AND SAVE
HARMLESS THE AGENT, EACH BANK AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, AND ATTORNEYS, AND EACH OF THEM (THE
"INDEMNIFIED PARTIES"), FROM AND AGAINST ALL CLAIMS, ACTIONS, SUITS,
AND OTHER LEGAL PROCEEDINGS, DAMAGES, COSTS, INTEREST, CHARGES,
TAXES, COUNSEL FEES, AND OTHER EXPENSES AND PENALTIES (INCLUDING
WITHOUT LIMITATION ALL ATTORNEY FEES AND COSTS OR EXPENSES OF
SETTLEMENT) WHICH ANY OF THE INDEMNIFIED PARTIES MAY SUSTAIN OR INCUR
BY REASON OF OR ARISING OUT OF (a) THE MAKING OF ANY LOAN HEREUNDER,
THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE NOTES AND THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY AND THE
EXERCISE OF ANY OF THE BANKS' RIGHTS UNDER THIS AGREEMENT AND THE
NOTES OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, DAMAGES, COSTS,
AND EXPENSES INCURRED BY ANY OF THE INDEMNIFIED PARTIES IN
INVESTIGATING, PREPARING FOR, DEFENDING AGAINST, OR PROVIDING
EVIDENCE, PRODUCING DOCUMENTS, OR TAKING ANY OTHER ACTION IN RESPECT
OF ANY COMMENCED OR THREATENED LITIGATION UNDER ANY FEDERAL
SECURITIES LAW OR ANY SIMILAR LAW OF ANY JURISDICTION OR AT COMMON
LAW OR (b) ANY AND ALL CLAIMS OR PROCEEDINGS (WHETHER BROUGHT BY A
PRIVATE PARTY, GOVERNMENTAL AUTHORITY OR OTHERWISE) FOR BODILY
INJURY, PROPERTY DAMAGE, ABATEMENT, REMEDIATION, ENVIRONMENTAL
DAMAGE, OR IMPAIRMENT OR ANY OTHER INJURY OR DAMAGE RESULTING FROM OR
RELATING TO THE RELEASE OF ANY HAZARDOUS MATERIALS LOCATED UPON,
MIGRATING INTO, FROM, OR THROUGH OR OTHERWISE RELATING TO ANY
PROPERTY OWNED OR LEASED BY THE BORROWER OR ANY SUBSIDIARY (WHETHER
OR NOT THE RELEASE OF SUCH HAZARDOUS MATERIALS WAS CAUSED BY THE
BORROWER, ANY SUBSIDIARY, A TENANT, OR SUBTENANT OF THE BORROWER OR
ANY SUBSIDIARY, A PRIOR OWNER, A TENANT, OR SUBTENANT OF ANY PRIOR
OWNER OR ANY OTHER PARTY AND WHETHER OR NOT THE ALLEGED LIABILITY IS
ATTRIBUTABLE TO THE HANDLING, STORAGE, GENERATION, TRANSPORTATION, OR
DISPOSAL OF ANY HAZARDOUS MATERIALS OR THE MERE PRESENCE OF ANY
HAZARDOUS MATERIALS ON SUCH PROPERTY; PROVIDED THAT THE BORROWER
SHALL NOT BE LIABLE TO THE INDEMNIFIED PARTIES WHERE THE RELEASE OF
SUCH HAZARDOUS MATERIALS OCCURS AT ANY TIME AT WHICH THE BORROWER OR
ANY SUBSIDIARY CEASES TO OWN OR LEASE SUCH PROPERTY); AND PROVIDED
FURTHER THAT NO INDEMNIFIED PARTY SHALL BE ENTITLED TO THE BENEFITS
OF THIS SECTION 12.16 TO THE EXTENT ITS OWN GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT CONTRIBUTED TO ITS LOSS; AND PROVIDED FURTHER THAT
IT IS THE INTENTION OF THE BORROWER TO INDEMNIFY THE INDEMNIFIED
PARTIES AGAINST THE CONSEQUENCES OF THEIR OWN NEGLIGENCE. THIS
AGREEMENT IS INTENDED TO PROTECT AND INDEMNIFY THE INDEMNIFIED
PARTIES AGAINST ALL RISKS HEREBY ASSUMED BY THE BORROWER. FOR
PURPOSES OF THE FOREGOING SECTION 12.16, THE PHRASE "CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED THEREBY" SET FORTH IN SUBPARAGRAPH (a)
ABOVE SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FINANCING OF ANY
CORPORATE TAKEOVER PERMITTED HEREUNDER AND THE BORROWER'S USE OF THE
LOAN PROCEEDS FOR THE PURPOSE OF ACQUIRING ANY EQUITY INTERESTS
DESCRIBED IN SUBPARAGRAPH (ii) OF THE DEFINITION OF "QUALIFYING
ASSETS" SET FORTH IN THIS AGREEMENT (AS AMENDED). THE OBLIGATIONS OF
THE BORROWER UNDER THIS SECTION 12.16 SHALL SURVIVE ANY TERMINATION
OF THIS AGREEMENT AND THE REPAYMENT OF THE NOTES.
12.17 Payments Set Aside. To the extent that the Borrower makes a payment
or payments to the Agent or any Bank or the Agent or any Bank
exercises its right of set off, and such payment or payments or the
proceeds of such set off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other
Person under any Debtor Law or equitable cause, then, to the extent
of such recovery, the obligation or part thereof originally intended
to be satisfied, and all rights and remedies therefor, shall be
revived and shall continue in full force and effect as if such
payment had not been made or set off had not occurred.
12.18 Loan Agreement Controls. If there are any conflicts or
inconsistencies among this Agreement and any other document executed
in connection with the transactions connected herewith, the
provisions of this Agreement shall prevail and control.
<PAGE>
12.19 Obligations Several. The obligations of each Bank under this
Agreement and the Note to which it is a party are several, and no
Bank shall be responsible for any obligation or Commitment of any
other Bank under this Agreement and the Note to which it is a party.
Nothing contained in this Agreement or the Note to which it is a
party, and no action taken by any Bank pursuant thereto, shall be
deemed to constitute the Banks to be a partnership, an association, a
joint venture, or any other kind of entity.
12.20 Pro Rata Treatment. All Loans under, and all payments and other
amounts received in connection with this Agreement (including,
without limitation, amounts received as a result of the exercise by
any Bank of any right of set off) shall be effectively shared by the
Banks ratably in accordance with the respective Pro Rata Percentages
of the Banks. If any Bank shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set off,
or otherwise) on account of the principal of, or interest on, or fees
in respect of, any Note held by it (other than pursuant to Section
2.3(d)) in excess of its Pro Rata Percentage of payments on account
of similar Notes obtained by all the Banks, such Bank shall forthwith
purchase from the other Banks such participations in the Notes or
Loans made by them as shall be necessary to cause such purchasing
Bank to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Bank, such purchase from
each Bank shall be rescinded and such Bank shall repay to the
purchasing Bank the purchase price to the extent of such recovery
together with an amount equal to such Bank's ratable share (according
to the proportion of (a) the amount of such Bank's required repayment
to (b) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in
respect of the total amount so recovered. Disproportionate payments
of interest shall be shared by the purchase of separate
participations in unpaid interest obligations, disproportionate
payments of fees shall be shared by the purchase of separate
participations in unpaid fee obligations, and disproportionate
payments of principal shall be shared by the purchase of separate
participations in unpaid principal obligations. The Borrower agrees
that any Bank so purchasing a participation from another Bank
pursuant to this Section 12.20 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Bank
were the direct creditor of the Borrower in the amount of such
participation. Notwithstanding the foregoing, a Bank may receive and
retain an amount in excess of its Pro Rata Percentage to the extent
but only to the extent, that such excess results from such Bank's
Highest Lawful Rate exceeding another Bank's Highest Lawful Rate.
12.21 No Rights, Duties or Obligations of Syndication Agent, Documentation
Agent or Co-Agents. The Borrower, the Agent and each Bank acknowledge
and agree that except for the rights, powers, obligations and
liabilities under this Agreement and the other Loan Documents as a
Bank, Bank One, NA, as Syndication Agent, First Union National Bank,
as Documentation Agent, and Bank of America, N.A., Fleet National
Bank, The Fuji Bank, Limited and The Norinchukin Bank, New York
Branch, as Co-Agents, shall have no additional rights, powers,
obligations or liabilities under this agreement or any other Loan
Documents in their capacities as Syndication Agent, Documentation
Agent or Co-Agents, respectively.
12.22 Final Agreement. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT'S
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
12.23 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their respective officers thereunto
duly authorized, have executed this Agreement on the dates set forth below to be
effective as of August 28, 2000.
SOUTHERN UNION COMPANY
By. RONALD J. ENDRES
-----------------------------------------
Ronald J. Endres, Executive Vice President
Commitment: THE CHASE MANHATTAN BANK,
$45,000,000 for itself and as Agent for the Banks
By:
Name:
Title:
Commitment: BANK ONE, NA
$45,000,000
By:
Name:
Title:
Address for Notices:
Bank One, NA
1 Bank One Plaza, Suite IL1-0363
Chicago, Illinois 60670
Attention: Dawn M. Lawler
Fax No.: (312) 732-3055
Commitment: FIRST UNION NATIONAL BANK
$45,000,000
By:
Name:
Title:
Address for Notices:
First Union National Bank
301 S. College Street
Charlotte, North Carolina 28288-0735
Attention: Mitch Wilson
Fax No.: (704) 383-7611
<PAGE>
Commitment: BANK OF AMERICA, N.A.
$40,000,000
By:
Name:
Title:
Address for Notices:
Bank of America, N.A.
100 N. Tryon Street
Mail Code: NC1-007-16-13
Charlotte, North Carolina 28255
Attention: Michelle Schoenfeld
Fax No.: (704) 386-1319
Commitment: FLEET NATIONAL BANK
$40,000,000
By:
Name:
Title:
Address for Notices:
Fleet National Bank
100 Federal Street
Boston, Massachusetts 02110
Attention: Stephen Hoffman
Fax No.: (617) 434-3652
Commitment: THE FUJI BANK, LIMITED
$40,000,000
By:
Name:
Title:
Address for Notices:
The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Attention: Jacques Azagury
Fax No.: (713) 759-0048
Separate Domestic and Eurodollar Lending Office:
The Fuji Bank, Limited
Two World Trade Center, 79th Floor
New York, New York 10048-0042
<PAGE>
Commitment: THE NORINCHUKIN BANK,
$40,000,000 NEW YORK BRANCH
By:
Name:
Title:
Address for Notices:
The Norinchukin Bank, New York Branch
245 Park Avenue, 29th Floor
New York, New York 10167
Attention: Takaaki Yamamiya
Fax No.: (212) 697-5754
Commitment: CHANG HWA COMMERCIAL BANK
$25,000,000
By:
Name:
Title:
Address for Notices:
Chang Hwa Commercial Bank
333 S. Grand Avenue, Suite 600
Los Angeles, California 90071
Attention: Harry Lin
Fax No.: (213) 620-7227
Commitment: THE BANK OF TOKYO-MITSUBISHI, LTD.
$25,000,000
By:
Name:
Title:
Address for Notices:
The Bank of Tokyo-Mitsubishi, Ltd.
1100 Louisiana Street, Suite 2800
Houston, Texas 77002
Attention: Iris Munoz
Fax No.: (713) 655-3855
<PAGE>
Commitment: CREDIT LYONNAIS NEW YORK BRANCH
$25,000,000
By:
Name:
Title:
Address for Notices:
Credit Lyonnais New York Branch
1000 Louisiana, Suite 5360
Houston, Texas 77002
Attention: Darrell Stanley
Fax No.: (713) 751-0307
Separate Domestic and Eurodollar Lending Office:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Commitment: THE DAI-ICHI KANGYO BANK, LTD.
$25,000,000 NEW YORK BRANCH
By:
Name:
Title:
Address for Notices:
The Dai-Ichi Kangyo Bank, Ltd.
New York Branch
One World Trade Center, 48th Floor
New York, New York 10048
Attention: Azlan S. Ahmad
Fax No.: (212) 524-0579
Commitment: NATIONAL AUSTRALIA BANK LIMITED, A.C.N.
$25,000,000 004044937
By:
Name:
Title:
Address for Notices:
National Australia Bank Limited
200 Park Avenue, 34th Floor
New York, New York 10166
Attention: Frank Campiglia
Fax No.: (212) 983-1969
<PAGE>
Commitment: BAYERISCHE HYPO-AND VEREINSBANK AG,
$25,000,000 NEW YORK BRANCH
By:
Name:
Title:
By:
Name:
Title:
Address for Notices:
Bayerische Hypo-and Vereinsbank, AG, New York Bank
150 East 42nd Street
New York, New York 10017
Attention: Yoram Dankner
Fax No.: (212) 672-5530
Separate Eurodollar Lending Office:
Bayerische Hypo-and Vereinsbank, AG, Grand Cayman
Branch
c/o Bayerische Hypo-and Vereinsbank AG
150 East 42nd Street
New York, New York 10017
Commitment: THE INDUSTRIAL BANK OF JAPAN
$25,000,000 TRUST COMPANY
By:
Name:
Title:
Address for Notices:
The Industrial Bank of Japan Trust Company
Three Allen Center, Suite 4850
333 Clay Street
Houston, Texas 77002
Attention: Lynn Williford
Fax No.: (713) 651-9209
Separate Domestic and Eurodollar Lending Office:
The Industrial Bank of Japan Trust Company
1251 Avenue of the Americas
New York, New York 10020
<PAGE>
Commitment: WELLS FARGO BANK TEXAS,
$25,000,000 NATIONAL ASSOCIATION
By:
Name:
Title:
Address for Notices:
Wells Fargo Bank Texas, National Association
1000 Louisiana, 3rd Floor - Energy Department
Houston, Texas 77002
Attention: Alan Smith
Fax No.: (713) 739-1087
Separate Domestic and Eurodollar Lending Office:
Wells Fargo Bank Loan Center
1740 Broadway
Denver, Colorado 80274
Commitment: KBC BANK N.V.
$25,000,000
By:
Name:
Title:
Address for Notices:
KBC Bank N.V.
Atlanta Representative Office
245 Peachtree Center Avenue, Suite 2550
Atlanta, Georgia 30303
Attention: Filip Ferrante
Fax No.: (404) 584-5466
Separate Domestic and Eurodollar Lending Office:
KBC Bank N.V.
New York Branch
125 West 55th Street
New York, New York 10019
<PAGE>
Commitment: WESTDEUTSCHE LANDESBANK
$25,000,000 GIROZENTRALE, NEW YORK BRANCH
By:
Name:
Title:
By:
Name:
Title:
Address for Notices:
Westdeutsche Landesbank Girozentrale,
New York Branch
1211 Avenues of the Americas
New York, New York 10036
Attention: Anthony Alessandro
Fax No.: (212) 852-6148
Commitment: CITIZENS BANK OF RHODE ISLAND
$10,000,000
By:
Name:
Title:
Address for Notices:
Citizens Bank of Rhode Island
One Citizens Plaza, Mail Stop RC0480
Providence, Rhode Island 02903
Attention: Marian L. Barrette
Fax No.: (401) 455-5404
Commitment: SUNTRUST BANK
$10,000,000
By:
Name:
Title:
Address for Notices:
SunTrust Bank
303 Peachtree Street NE, 3rd Floor, M.C. 1929
Atlanta, Georgia 30308
Attention: Linda Stanley
Fax No.: (404) 827-6270
<PAGE>
Commitment: GULF INTERNATIONAL BANK B.S.C.
$10,000,000
By:
Name:
Title:
Address for Notices:
Gulf International Bank B.S.C.
335 Madison Avenue, Suite 1101
New York, New York 10017
Attention: Ms. Mireille Khalidi
Fax No.: (212) 922-2339
Separate Eurodollar Lending Office:
Gulf International Bank B.S.C., Grand Cayman
c/o 335 Madison Avenue, Suite 1101
New York, New York 10017
<PAGE>
EXHIBIT A
TERM NOTE
$
--------------------------------- ------------------,200---
FOR VALUE RECEIVED, the undersigned, SOUTHERN UNION COMPANY, a corporation
organized under the laws of Delaware (the "Borrower"), HEREBY PROMISES TO PAY to
the order of (the "Bank"), on or before (the "Maturity Date"), the principal sum
of Million and No/ 100ths Dollars ($ ,000,000.00) in accordance with the terms
and provisions of that certain Term Loan Credit Agreement dated August , 2000,
by and among the Borrower, the Bank, the other banks named on the signature
pages thereof, and THE CHASE MANHATTAN BANK, as Agent (the "Credit Agreement").
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Credit Agreement.
The outstanding principal balance of this Term Note shall be payable at the
Maturity Date. The Borrower promises to pay interest on the unpaid principal
balance of this Term Note from the date of any Loan evidenced by this Term Note
until the principal balance thereof is paid in full. Interest shall accrue on
the outstanding principal balance of this Term Note from and including the date
of any Loan evidenced by this Term Note to but not including the Maturity Date
at the rate or rates, and shall be due and payable on the dates, set forth in
the Credit Agreement. Any amount not paid when due with respect to principal
(whether at stated maturity, by acceleration or otherwise), costs or expenses,
or, to the extent permitted by applicable law, interest, shall bear interest
from the date when due to and excluding the date the same is paid in full,
payable on demand, at the rate provided for in Section 2.2(b) of the Credit
Agreement.
Payments of principal and interest, and all amounts due with respect to costs
and expenses, shall be made in lawful money of the United States of America in
immediately available funds, without deduction, set off or counterclaim to the
account of the Agent at the principal office of The Chase Manhattan Bank in
Houston, Texas (or such other address as the Agent under the Credit Agreement
may specify) not later than noon (Houston time) on the dates on which such
payments shall become due pursuant to the terms and provisions set forth in the
Credit Agreement.
If any payment of interest or principal herein provided for is not paid when
due, then the owner or holder of this Term Note may at its option, by notice to
the Borrower, declare the unpaid, principal balance of this Term Note, all
accrued and unpaid interest thereon and all other amounts payable under this
Term Note to be forthwith due and payable, whereupon this Term Note, all such
interest and all such amounts shall become and be forthwith due and payable in
full, without presentment, demand, protest, notice of intent to accelerate,
notice of actual acceleration or further notice of any kind, all of which are
hereby expressly waived by the Borrower.
If any payment of principal or interest on this Term Note shall become due on a
Saturday, Sunday, or public holiday on which the Agent is not open for business,
such payment shall be made on the next succeeding Business Day and such
extension of time shall in such case be included in computing interest in
connection with such payment.
In addition to all principal and accrued interest on this Term Note, the
Borrower agrees to pay (a) all reasonable costs and expenses incurred by the
Agent and all owners and holders of this Term Note in collecting this Term Note
through any probate, reorganization bankruptcy or any other proceeding and (b)
reasonable attorneys' fees when and if this Term Note is placed in the hands of
an attorney for collection after default.
<PAGE>
All agreements between the Borrower and the Bank, whether now existing or
hereafter arising and whether written or oral, are hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of demand being
made on this Term Note or otherwise, shall the amount paid, or agreed to be
paid, to the Bank for the use, forbearance, or detention of the money to be
loaned under the Credit Agreement and evidenced by this Term Note or otherwise
or for the payment or performance of any covenant or obligation contained in the
Credit Agreement or this Term Note exceed the amount permissible at Highest
Lawful Rate. If as a result of any circumstances whatsoever, fulfillment of any
provision hereof or of the Credit Agreement at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by applicable usury law, then, ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if from any such
circumstance, the Bank shall ever receive interest or anything which might be
deemed interest under applicable law which would exceed the amount permissible
at the Highest Lawful Rate, such amount which would be excessive interest shall
be applied to the reduction of the principal amount owing on account of this
Term Note or the amounts owing on other obligations of the Borrower to the Bank
under the Credit Agreement and not to the payment of interest, or if such
excessive interest exceeds the unpaid principal balance of this Term Note and
the amounts owing on other obligations of the Borrower to the Bank under the
Credit Agreement, as the case may be, such excess shall be refunded to the
Borrower. In determining whether or not the interest paid or payable under any
specific contingencies exceeds the Highest Lawful Rate, the Borrower and the
Bank shall, to the maximum extent permitted under applicable law, (a)
characterize any nonprincipal payment as an expense, fee or premium rather than
as interest; (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate and spread in equal parts during the period of the
full stated term of this Term Note, all interest at any time contracted for,
charged, received or reserved in connection with the indebtedness evidenced by
this Term Note.
This Term Note is one of the Notes provided for in, and is entitled to the
benefits of, the Credit Agreement, which Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events, for prepayments on account of principal hereof prior
to the maturity hereof upon the terms and conditions and with the effect therein
specified, and provisions to the effect that no provision of the Credit
Agreement or this Term Note shall require the payment or permit the collection
of interest in excess of the Highest Lawful Rate. It is contemplated that by
reason of prepayments or repayments hereon prior to the Maturity Date, there may
be times when no indebtedness is owing hereunder prior to such date; but
notwithstanding such occurrence this Term Note shall remain valid and shall be
in full force and effect as to Loans made pursuant to the Credit Agreement
subsequent to each such occurrence.
Except as otherwise specifically provided for in the Credit Agreement, the
Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default, protest,
notice of protest, notice of intent to accelerate, notice of acceleration and
diligence in collecting and bringing of suit against any party hereto, and agree
to all renewals, extensions or partial payments hereon and to any release or
substitution of security hereof, in whole or in part, with or without notice,
before or after maturity.
THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.
IN WITNESS WHEREOF, the Borrower has caused this Term Note to be executed and
delivered by its officer thereunto duly authorized effective as of the date
first above written.
SOUTHERN UNION COMPANY
By:
Name:
Title:
<PAGE>
EXHIBIT B
NOTICE OF BORROWING
(Term Loan Credit Facility)
The undersigned hereby certifies that s/he is an officer of SOUTHERN UNION
COMPANY, a corporation organized under the laws of Delaware (the "Borrower"),
authorized to execute this Notice of Borrowing on behalf of the Borrower. With
reference to that Term Loan Credit Agreement dated August , 2000 (as same may be
amended, modified, increased, supplemented and/or restated from time to time,
the "Credit Agreement") entered into by and between the Borrower, THE CHASE
MANHATTAN BANK, as Agent, and the Banks identified therein, the undersigned
further certifies, represents and warrants to Banks on behalf of the Borrower
that to his best knowledge and belief after reasonable and due investigation and
review, all of the following statements are true and correct (each capitalized
term used herein having the same meaning given to it in the Credit Agreement
unless otherwise specified):
(a) Borrower requests that the Banks advance to the Borrower the aggregate sum
of $ by no later than , 200 (the "Borrowing Date"). Immediately following
such Loan, the aggregate outstanding balance of Loans shall equal $ .
Borrower requests that the Loans bear interest as follows:
(i) The principal amount of the Loans, if any, which shall bear interest
at the Alternate Base Rate requested to be made by the Banks is $ .
The initial Rate Period for such Loans shall be 90 days.
(ii) The principal amount of the Loans, if any, which shall bear interest
at the Eurodollar Rate for which the Rate Period shall be fifteen
days requested to be made by the Banks is $ .
(iii) The principal amount of the Loans, if any, which shall bear interest
at the Eurodollar Rate for which the Rate Period shall be one month
requested to be made by the Banks is $ .
(iv) The principal amount of the Loans, if any, which shall bear interest
at the Eurodollar Rate for which the Rate Period shall be two months
requested to be made by the Banks is $ .
(v) The principal amount of the Loans, if any, which shall bear interest
at the Eurodollar Rate for which the Rate Period shall be three
months requested to be made by the Banks is $ .
(vi) The principal amount of the Loans, if any, which shall bear interest
at the Eurodollar Rate for which the Rate Period shall be six months
requested to be made by the Banks is $ .
[(b) The proceeds of the borrowing shall be deposited into Borrower's demand
deposit account at The Chase Manhattan Bank more fully described as
follows:
Account No. 09916100522, styled Southern Union Company.]
(c) [ of new funds are to be advanced to finance the Pending Acquisitions in
accordance with Section 5.1 of the Credit Agreement, and] $ of rollover
borrowings is hereby requested for the purposes of continuing Loans
currently outstanding under the Credit Agreement.
(d) The Expiration Date of each Rate Period specified in (a) above shall be the
last day of such Rate Period.
(e) As of the date hereof, and as a result of the making of the requested
Loans, there does not and will not exist any Default or Event of Default.
<PAGE>
(f) The representations and warranties contained in Section 6 of the Credit
Agreement are true and correct in all material respects as of the date
hereof and shall be true and correct upon the making of the requested Loan
(or if applicable, the rollover of the above-described principal balance(s)
of Loans currently outstanding under the Credit Agreement), with the same
force and effect as though made on and as of the date hereof and thereof.
(g) No change that would cause a material adverse effect on the business,
operations or condition (financial or otherwise) of the Borrower has
occurred since the date of the most recent financial statements provided to
the Banks dated as of , 200 .
EXECUTED AND DELIVERED this day of , 200 .
-------------- ------------------ ---
SOUTHERN UNION COMPANY
By:
Name:
Title:
<PAGE>
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE
[NAME AND ADDRESS OF
ASSIGNING BANK]
, 200
------------------------- ----
Re: Southern Union Company Credit Agreement (Term Loan Credit Facility)
Ladies and Gentlemen:
Reference is made to that certain Term Loan Credit Agreement dated as of August
28, 2000 (the "Credit Agreement"), by and among those certain financial
institutions that are now or hereafter a party to said Credit Agreement, The
Chase Manhattan Bank, as agent for such financial institutions (the "Agent") and
Southern Union Company (the "Company"). Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to such terms in the Credit
Agreement.
Each reference to the Credit Agreement, the Notes, or any other document
evidencing or governing the Loans (all such documents collectively, the
"Financing Documents") includes each such document as amended, modified,
extended or replaced from time to time. All times are Houston times.
1. ASSIGNMENT. We hereby sell you and assign to you without recourse, and you
hereby unconditionally and irrevocably acquire for your own account and
risk, a percent ( %) undivided interest ("your assigned share")
in each of the following
(the "Assigned Obligations"):
a. our Note;
b. all Loans and interest thereon as provided in Section 2 of the Credit
Agreement [,except that interest shall accrue on your assigned share
in the principal of Alternate Base Rate Loans and Eurodollar Rate
Loans at an annual rate equal to the rate provided in the Credit
Agreement minus %]; and
c. commitment fees payable pursuant to Section 4 of the Credit
Agreement[, except that your assigned share in such fees shall
be at an annual rate equal to the rate provided in the Credit
Agreement minus %].
1. MATERIALS PROVIDED ASSIGNEE
a. We will promptly request that the Company issue new Notes to us
and to you in substitution for our Note to reflect the assignment
set forth herein. Upon issuance of such substitute Notes, (i)
you will become a Bank under the Credit Agreement, (ii) you will
assume our obligations under the Credit Agreement to the extent of
your assigned share, and (iii) the Company will release us from our
obligations under the Credit Agreement to the extent, but only to
the extent, of your assigned share. The Company consents to such
release by signing this Agreement where indicated below. As a
Bank, you will be entitled to the benefits and subject to the
obligations of a "Bank", as set forth in the Credit Agreement,
and your rights and liabilities with respect to the other
Banks and the Agent will be governed by the Credit Agreement,
including without limitation Section 11 thereof.
<PAGE>
b. We have furnished you copies of the Credit Agreement, our Note and
each other Financing Document you have requested. We do not
represent or warrant (i) the priority, legality, validity, binding
effect or enforceability of any Financing Document or any security
interest created thereunder, (ii) the truthfulness and accuracy of
any representation contained in any Financing Document, (iii)
the filing or recording of any Financing Document necessary to
perfect any security interest created thereunder, (iv) the financial
condition of the Company or any other Person obligated under any
Financing Document, any financial or other information,
certificate, receipt or other document furnished or to be furnished
under any Financing Document or (v) any other matter not
specifically set forth herein having any relation to any Financing
Document, your interest in one Note, the Company or any other
Person. You represent to us that you are able to make, and have made,
your own independent investigation and determination of the
foregoing matters, including, without limitation, the credit
worthiness of the Company and the structure of the transaction.
3. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas. You
irrevocably submit to the jurisdiction of any State or Federal court
sitting in Austin, Texas in any suit, action or proceeding arising out of
or relating to this Agreement and irrevocably waive any objection you may
have to this laying of venue of any such suit, action or proceeding brought
in any such court and any claim that any such suit, action or proceeding
has been brought in an inconvenient forum. We may serve process in any
manner permitted by law and may bring proceedings against you in any other
jurisdiction.
4. NOTICES. All notices and other communications given hereunder to a party
shall be given in writing (including bank wire, telecopy, telex or similar
writing) at such party's address set forth on the signature pages hereof or
such other address as such party may hereafter specify by notice to the
other party. Notice may also be given by telephone to the Person, or any
other officer in the office, listed on the signature pages hereof if
confirmed promptly by telex or telecopy. Notices shall be effective
immediately, if given by telephone; upon transmission, if given by bank
wire, telecopy or telex; five days after deposit in the mails, if mailed;
and when delivered, if given by other means.
5. AUTHORITY. Each of us represents and warrants that the execution and
delivery of this Agreement have been validly authorized by all necessary
corporate action and that this Agreement constitutes a valid and legally
binding obligation enforceable against it in accordance with its terms.
6. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
and by each party on separate counterparts, each of which shall be an
original but all of which taken together shall be but one instrument.
7. AMENDMENTS. No amendment modification or waiver of any provision of this
Agreement shall be effective unless in writing and signed by the party
against whom enforcement is sought.
<PAGE>
If the foregoing correctly sets forth our agreement, please so indicate by
signing the enclosed copy of this Agreement and returning it to us.
Very truly yours,
By:
Name:
Title:
[Street Address]
[City, State, Zip Code]
Telephone:
Telecopy:
AGREED AND ACCEPTED:
By:
---------------------------
Attention:
Telephone:
Telecopy:
Account for Payments:
ASSIGNMENT APPROVED PURSUANT TO SECTION 12.13 OF THE CREDIT AGREEMENT AND
RELEASE APPROVED IN SECTION 2 OF THIS AGREEMENT:
SOUTHERN UNION COMPANY
By:
Name:
Title:
